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How Did Your Parents Affect Your Views on Credit?

My sister recently left a comment that she’d gotten her first credit card. She’s a highly responsible person with an even higher net worth than I had before the marriage, so I think she’ll do well.

She included the phrase: “Dad’s made me paranoid enough about credit to keep me from actually carrying over a balance month to month.”

I was curious about this, because I’ve also been pretty paranoid, and so I asked: “Were you more scared by mom and dad’s big credit card debt that they were paying off when we were kids or by dad’s stories from customer service?”

She responded: “I’d have to say that it was a combo of both. Mom’s stories about the problems with debt and Dad’s about customer service. Very frightening.”

I didn’t know too much about credit cards as a kid, but when I was maybe 8 or 9ish, I learned that my parents had a large credit card debt from using them irresponsibly for a short period. At least that’s what I think it was. I got a short explanation of how credit cards work—basically that you pay money to spend money—and that one shouldn’t use them for things one can’t afford.

Didn’t ever learn more and I wasn’t too panicked because I knew we could afford food and our house, which was what mattered most.

One of my mom’s best friends also got into credit card debt and even though her husband could have paid it off (eventually), she got a part-time job to take responsibility for it. My mom admired her for that. (It may have also been a good sane way to get out of the house sometimes.)

Then, our father got a software engineering job at one of the major credit card companies. He’s mostly worked in things like beefing up the fraud-protection services (yay!), but his company also required him to be a CSR for half a work day each month.

So every month, he’d come home and tell us stories of all the different cases he handled. I think it was his way of decompressing and it was certainly interesting. I learned a lot about credit, carrying balances, how interest gets computed, that kind of thing. I also heard about waiving late fees for responsible borrowers who’d done really well except this one time.

I think those were my biggest childhood/young adulthood influences concerning credit cards and credit.

I’m also of the opinion that the stories we hear shape our view of the world. They can be more persuasive than statistics and they really bring home the experience.

What sorts of stories did your parents tell you about credit? What did you observe growing up? Do you think that made a difference in your adult decisions?


{ 19 comments… read them below or add one }

The Penny Saved February 4, 2008 at 4:20 pm

Good call on that…I never really thought about my parents effect on my own credit choices…but Im thinking it goes even further than that. I wonder how watching them as I was growing up affected my entire view of money and finances…just a thought.

-Jesse

mrsmicah February 4, 2008 at 4:23 pm

I agree, Jesse, they shape a lot more than that. But money and finances is so broad that I thought I’d just focus on credit in this one. Maybe I can come up with another topic like frugality for later.

SavingDiva February 4, 2008 at 4:30 pm

My mom would spend money and my dad would complain about it. However, it wasn’t really discussed. My parents did encourage me to get a credit card in college to start building a credit history. I only used it for big purchases (flight to Europe) and paid it off immediately. I didn’t go into credit card debt until I graduated from college and realized there was a lot of stuff that I wanted! 😉

Sjean February 4, 2008 at 4:32 pm

My parents didn’t talk to me about credit much. They actually were slightly irresponsible with it, for awhile at least, but I didn’t know until I was pretty old. Still, I’ve had a card since I was 18 or 19 and never carried a balance, never had a late fee, and now have a pretty good credit history.

Laura February 4, 2008 at 4:38 pm

I’ve seen my parents stress heavily over paying the regular bills AND the credit cards. It made me want to keep my debt low at first. (I had this strange mentality that a small amount of credit card debt was ok. )

I’m very concious about interest rates and fees now. The good news is that my mom paid off her credit cards and her car loan when she sold her house. She found another house in another state bigger and cheaper.

Caro February 4, 2008 at 4:56 pm

My Dad helped me get a credit card as soon as I turned 18 and then later had a talk with me and a credit expert about the best way to establish a good credit history (take out a car loan and do not pay it off very early).

At some point in college I started spending money on my credit card that I couldn’t pay off each month. Every once in a while my dad would open my bills, freak out that I was paying interest, and then pay off my card. He was so adamant about not paying interest on credit cards that he just felt that he had to. When I left college I had a conversation with my dad where I told him that he needed to not do that again, because every time he did, I spent right up to where he paid it off again. I told him I needed to feel the pain of paying it off myself so that I would stop spending like that. He listened, and I did, and I have not had any credit card debt since then. (Well, except for some fixed % rate deals, but those don’t really count.)

I also remember very distinctly my dad talking about another family that we knew who really leveraged their future earnings to the hilt and took out a lot of loans for big items (house, school, etc.). He went over the finances of the situation and how it actually made them money, but also talked about the dangers of doing that without being very sure of A. your future income, and B. your ability not to turn that into a slippery slope. I was 13 or 14 at the time, but it has stuck with me.

deepali February 4, 2008 at 6:20 pm

I blogged about this a while back too – though I was thinking more in terms of the good and bad habits I picked up from my parents. We didn’t do much talking about money growing up – I just knew that my mom was overly frugal and cautious, and my dad was underly so. Occasionally, they found balance. 🙂

Hilda February 4, 2008 at 6:35 pm

My mom had a lot of debt when I was growing up. We didn’t talk much about it but it was very apparent. Her entire paycheck would cover the debts she accrued from the previous month and she’ll just take out another loan for the current month’s expenses. It was normal to her. I was the one who got stressed out and as a result, I learned from her what NOT TO DO.

Simple Tam February 4, 2008 at 7:31 pm

Mrs.M, this is an interesting point you bring up. While I grew up, my parents were responsible spenders and never really had credit card debt. I guess I adopted it as a part of life. I am very lucky in that respect. However, they did not talk money at home. And hence, I was not introduced to the dynamics of banking and investing till later in life. This is something I am going to do when I have kids. One of the better lessons from Rich Dad Poor Dad.

Fiscal Musings February 4, 2008 at 8:20 pm

I was always aware that there were money issues while I was growing up, and I told myself that I wouldn’t ever let myself get into the same sort of mess.

It was mostly not wanting to do what I had observed.

ms. m&p February 4, 2008 at 9:23 pm

My parents never discussed debt with us, but I know they had/have significant cc debt. It was strange because they never talked to us about it, but me and my sister really started repeating their mistakes. But, because we saw what they went through, we stopped ourselves and, independently of each other, worked our way out of debt.

I vow to teach any kids I have all the gory details of personal finance. Money should be talked about!

wealthy_1 February 4, 2008 at 9:53 pm

As a child, I was oblivious to the whole credit card thing. My parents only had one credit card in the days before MC and Visa and that was Sears. I didn’t know that you should pay down your balance to zero. I only knew that you should pay your bills on time. I never realized that you don’t have to have debt if you don’t want to have debt.

fathersez February 5, 2008 at 4:23 am

My parents never knew anything about credit cards. I was the first to get one.

I don’t know where I got my knowledge about cards and all that and why I have always paid of my balances every month.

I do think, this must have come from my parents who were very good with paying debts on time all the time.

Now as a parent, I have to figure out passing the right lessons to my children.

plonkee February 5, 2008 at 7:21 am

My mum always used to say that credit cards were fine as long as you pay off the bill in full each month, and that’s what I’ve always done. I have no idea what my parents actually did with credit cards, just what they taught.

Canadian February 5, 2008 at 8:52 am

My parents never had a credit card at all. They were opposed to them. I got a credit card around age 19 or 20 (thinking I should start building a credit history) and have always paid it off in full every month. I probably have this careful attitude because it’s a slight softening of my parents’ position.

Mrs Micah's Mom February 5, 2008 at 3:07 pm

We got into cc debt when we had overspent at Christmas and two months later both cars needed expensive repairs and the hot water heater broke, all while we were sending our children to a private school, which we couldn’t really afford. I think our trip to Europe may also have set us back again, though I, at least, think it was worth it.

However, even at the worst, our net worth never went anywhere near negative. We figured that it would be worse to form the habit of using retirement investments to pay debts than to accept the loss from the interest, even if the other might have theoretically cost less.

E.C. February 5, 2008 at 8:51 pm

I remember when I was a fairly little kid and my dad first talked to me about credit cards. He explained that they were useful because you could use them to do things like call in orders for books and pay the bill at the end of the month rather than having to mail in the order form and a check and wait longer for your books to arrive. The idea of using credit cards to borrow money without a clear plan to pay it off in very short order is still somewhat foreign to me.

Chief Family Officer February 6, 2008 at 3:37 pm

I’ve thought about this a lot over the years as I’ve become wiser about personal finance. My parents taught me to be responsible – my dad made sure I could balance my checkbook, understood the perils of carrying a credit card balance, paid my bills on time, and established my own credit. I appreciate all of that for sure. But once I started figuring out what my financial goals are and how to meet them, I realized that there was an awful lot my parents DIDN’T teach me, the biggest lesson being how to build up savings. I was taught in generalities about investments and had an IRA by the time I was in college, but I was never shown how to “pay myself first” or even to create a spending plan that included savings. These are all things I plan to teach my kids as they grow up.

brandon February 7, 2008 at 1:24 pm

hey, my family told me credit cards were bad, but the last couple of years my mom has forgotten to file the quarterly income taxes and there’s not enough to pay in April so it goes on the credit card, also my mom is doing a Master’s degree and the card gets some of that. when I was a kid, I don’t know like 1986 we’d take a vacation to New Mexico and dad would carry traveller’s cheques that we’d spend at McDonalds. Now he buys Shell prepaid gas cards over the course of the year and stashes them so the gas for summer vacation is already paid for. He also has a separate savings account he uses for vacation and Christmas presents that he puts money in from doing odd jobs, like renting out his sound system of playing guitar at a wedding.

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