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Americans now owe $1.13 trillion in credit card debt

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[–] [email protected] 78 points 10 months ago (5 children)

https://www.marketplace.org/2024/01/29/why-credit-card-debt-rising-again/

Another reason credit card debt has been rising is because of the strong job market.

That’s because people with jobs feel comfortable spending money on their credit cards, said Liz Ann Sonders, chief investment strategist at Charles Schwab — a Marketplace underwriter.

Hmm. I would have guessed the opposite -- that you borrow if forced to in an emergency like a job loss, but if you have income, then you don't need to take out debt. Apparently that's not what humans actually do.

[–] [email protected] 29 points 10 months ago* (last edited 10 months ago) (6 children)

The amount of adults I teach how credit cards actually work is staggering and I’m just a manager. It’s pathetic how little we actually prepare our kids for the real world instead opting to teach them calculus (that most won’t actually need to use).

[–] [email protected] 15 points 10 months ago* (last edited 10 months ago) (1 children)

Fuck taxes and shit they need 2 weeks of Swahili

-Literally my school.

[–] [email protected] 2 points 10 months ago

Okay, but also Swahili would be a pretty cool fucking subject. If it’s not helpful at least it should be interesting.

[–] [email protected] 12 points 10 months ago* (last edited 10 months ago) (1 children)

Important things I had to learn on my own in adulthood:

How to research and vet sources.

How to cook and clean.

Amoritization of loans (car and home) and agreements.

Rental agreements and the basics of contract law.

Student loans (the interests rate plus accrual of interest while your are in school).

Taxes - federal, state and local taxes. What their rates are and what they pay for etc..

Insurance (Health, Home, Renters, Car etc.)

Utilities - how they are calculated etc.

Credit cards, interest rates, late payment consequences etc.

Retirement Programs (pensions, IRA, 401K etc.). Investments, how they work, etc.

Basic home repair and remodeling (electrical, plumbing, etc.). Basic car care etc.

[–] [email protected] 7 points 10 months ago

We used to call this home economics. Too bad they scrapped it in our public school system. Kids want to learn this stuff too that’s the sad thing.

[–] [email protected] 12 points 10 months ago (2 children)

One of my young coworkers had been running a huge balance on her card for two years. She was making minimum payments every month and didnt understand why the number wasnt going down.....

I had to sit her down and explain how interest works and helped her figure out how to take a lower interest loan to wipe out the credit card debt and get a repayment plan going

I wonder what would have happened to her if i didnt overhear her phone conversation and decided to be nosy and ask her about the credit situation...

[–] [email protected] 6 points 10 months ago

Doing gods work there. All we can do is our part to help those around us.

[–] [email protected] 4 points 10 months ago* (last edited 10 months ago) (1 children)

Yeah, at least when I went through school, personal finance wasn't taught.

I think that in fifth grade, we learned to write a check and balance a checkbook. I think that that was the net extent of it that showed up in formal schooling.

In the one home economics class I took, maybe seventh grade, I crocheted a Halloween wreath, but we never actually touched on personal finance. If it was gonna happen, that is where it was going to be covered.

Really came down to what your parents knew and taught you, I suppose.

[–] [email protected] 6 points 10 months ago* (last edited 10 months ago)

personal finance wasn't taught

Pretty sure this is by design... How many other people are in the same boat as my coworker? How many millions are they making off people like her?

Even for myself... I didnt get to the point where i was in her situation, but my own financial literacy wasnt that good just a few years ago.... I had no knowledge of investments or anything. My parents raised me to just give all my money to the bank to take care of

Wasnt until i took the time to learn the basics when i realized the bank is NOT your friend. You'll take 100% of the hit when the economy has a meltdown like 2008, but when you have a massive 10 year bull run and the SP500 goes 4x, you might see half of those gains in the bank mutual fund...

I pulled all my mutual funds and started self directed investing.... Way better gains than the bank

Banks are totally profiting off our ignorance and fear of numbers

[–] [email protected] 7 points 10 months ago* (last edited 10 months ago) (1 children)

calculus

I'd say that about the first half of Calculus I was useful to me, taught concepts.

However, a lot of the rest of it, as well as most of the next two calculus classes I took, involved memorizing tricks to do symbolic integration by hand. That is, frankly, of limited use to even people who need to do symbolic integration.

I remember going by my calculus professor's husband's (another math professor) office once to deal with some project I was doing and some integration came up and he promptly threw it into Mathematica on his computer to do it. I commented on it and he said "yeah, I don't have time to spend doing these by hand".

My smartphone and computers have Maxima installed, a free and open-source computer algebra system capable of doing symbolic integration. I have that with me all the time. It's very rare that I need to do symbolic integration in the first place.

"But what if you don't have a calculator with you?"

Today, that's usually a smartphone, but same idea.

In my parent's generation, they taught people to manually compute square roots. It was some numerical approximation, don't know what they did exactly, probably something like "pick a number, divide, average result and divisor, repeat with average". They didn't bother to teach that by the time I was going to school. It was just expected that you'd use a calculator.

I remember reading Richard Feynman's book, about how he used to show off some mental math shortcuts (much more useful in an era before calculators).

I agree that memorizing certain mental math processes can be useful, but the time wasted on doing symbolic integration in calculus is still one of my major annoyances, looking back. There is no shortage of material in mathematics that is useful and could be in the curriculum, and instead we did symbolic integration.

Maybe curriculum has improved since then.

[–] [email protected] 6 points 10 months ago (2 children)

Math education is a disaster. It seems to be thought of as symbolic calculation busywork that's supposed to translate to a good job somehow. I respected the proofwriting classes a lot more than the number crunching ones

[–] [email protected] 7 points 10 months ago* (last edited 10 months ago)

At least when I was in school, one thing that kept getting hammered home was that people had difficulty understanding graphs. That I didn't see as being an issue, not unless you're talking about something pretty exotic, but if accurate, it seems like it'd be pretty limiting. And I've seen a lot of later articles also saying that a lot of people have trouble with graph comprehension.

googles

https://towardsdatascience.com/numeracy-and-graph-literacy-in-the-united-states-ea2a11251739

Last month, Alessandro Romano, Chiara Sotis, Goran Dominioni, and Sebastián Guidi surveyed 2,000 people to demonstrate that “the public do not understand logarithmic graphs used to portray COVID-19.”

They found that only 41% of participants could correctly answer basic questions about log-scaled graphs (v.s. 84% accuracy for linear-scale).

But the problem is harder than log scales. As you’ll see below, much of “the public” struggle with even the most basic charts and graphs, let alone complex visualizations.

I wish they'd had more statistics. In my high school, they had half a semester as an elective. In my university curriculum, it wasn't a core class (social science majors would study it, I would guess).

I have explained basic sampling to a ton of people on Reddit when polls came up, because they didn't believe that a sample of 1000 people out of a much larger population could result in a representative outcome. We see poll data all the time. Even if you never perform a poll, understanding the mechanism at least enough to trust it and understand when a poll might not be representative (e.g. self-selecting Internet polls). Confidence levels. I think I covered regressions in high school in an (elective) physics class, not even in a statistics class. That's a useful skill -- get a bunch of numbers, be able to produce a formula to predict more of them and get an idea of how accurate your model is. I assume that if you didn't take it or it wasn't offered, then you just wouldn't ever touch on them.

[–] [email protected] 2 points 10 months ago (1 children)

Have you looked at math education in the US in the last 15 years? Because it is a lot better than the bullshit they did when I was a kid.

Now kids get an actual understanding and hence intuition about all of it instead of the 1970s approach: "this is the rule, you don't have to understand it; now, shut up and do it!"

Also, they teach kids about useful shit now like media literacy. In elementary and middle school. And they teach them a bit about economics, jobs, salaries, and budgets.

My kid is a freshman in HS now so I can't speak to whether they teach about personal finance type stuff but I would be surprised if they don't given the track record so far.

[–] [email protected] 2 points 10 months ago

It's telling how many parents complained because they can't understand their third grader's math homework. Math intuition and understanding should be the main focus at the earlier grades and crap like rote memorization of the times tabs should be dropped. Maybe I'd even teach formal logic and basic proofs in middle/high school (besides just geometry class)

[–] [email protected] 5 points 10 months ago (1 children)

Going as planned. They want customers that carry balances, pay late fees, pay overdraft fees, etc.

[–] [email protected] 1 points 10 months ago

I put a lot on parents for not teaching their kids. My kids are going to be prepared and it isn’t because of the school system.

[–] [email protected] 4 points 10 months ago (2 children)

Most people understand the math.

Very few people can delay gratification.

[–] [email protected] 5 points 10 months ago

I don’t find that at all. I get the a’ha moment all too often. They literally just were never taught how any of it worked. Takes maybe 5-10 min of telling someone how it works, how the credit score works and how to manipulate it, and how to use credit without letting it get away from them.

[–] [email protected] 3 points 10 months ago* (last edited 10 months ago) (1 children)

Most people understand the math.

Honestly, I don't know about that.

Exponential growth is really not something that I think is immediately intuitive to people. Like, we can deal with linear things pretty intuitively, but exponential growth is not something that comes pre-baked into our heads.

https://en.wikipedia.org/wiki/Wheat_and_chessboard_problem

The wheat and chessboard problem (sometimes expressed in terms of rice grains) is a mathematical problem expressed in textual form as:

If a chessboard were to have wheat placed upon each square such that one grain were placed on the first square, two on the second, four on the third, and so on (doubling the number of grains on each subsequent square), how many grains of wheat would be on the chessboard at the finish?

The problem may be solved using simple addition. With 64 squares on a chessboard, if the number of grains doubles on successive squares, then the sum of grains on all 64 squares is: 1 + 2 + 4 + 8 + ... and so forth for the 64 squares. The total number of grains can be shown to be 2^64−1 or 18,446,744,073,709,551,615 (eighteen quintillion, four hundred forty-six quadrillion, seven hundred forty-four trillion, seventy-three billion, seven hundred nine million, five hundred fifty-one thousand, six hundred and fifteen, over 1.4 trillion metric tons), which is over 2,000 times the annual world production of wheat.[1]

This exercise can be used to demonstrate how quickly exponential sequences grow, as well as to introduce exponents, zero power, capital-sigma notation, and geometric series. Updated for modern times using pennies and a hypothetical question such as "Would you rather have a million dollars or a penny on day one, doubled every day until day 30?", the formula has been used to explain compound interest. (Doubling would yield over one billion seventy three million pennies, or over 10 million dollars: 230−1=1,073,741,823).[2][3]

The problem appears in different stories about the invention of chess. One of them includes the geometric progression problem. The story is first known to have been recorded in 1256 by Ibn Khallikan.[4] Another version has the inventor of chess (in some tellings Sessa, an ancient Indian Minister) request his ruler give him wheat according to the wheat and chessboard problem. The ruler laughs it off as a meager prize for a brilliant invention, only to have court treasurers report the unexpectedly huge number of wheat grains would outstrip the ruler's resources.

If it were something that were immediately intuitive, if it didn't surprise people the first time they run into it, I don't think it would be such a long-lasting story.

[–] [email protected] 1 points 10 months ago

I feel that’s not the same thing as Joe Plumber under standing he pays a 30% charge on the balance of his credit card.

[–] [email protected] 15 points 10 months ago

The next paragraph says

That said, credit card delinquency rates have been rising this year, according to the Federal Reserve Bank of New York. That’s especially true among people with lower incomes and multiple types of debt.

From the original article

Meanwhile, households continue to show signs of strain — more cardholders are carrying debt from month to month or falling behind on payments.

(emphasis mine)

[–] [email protected] 12 points 10 months ago* (last edited 10 months ago)

https://www.cnbc.com/2023/01/10/americans-lean-heavily-on-credit-cards-amid-inflation.html

Now, 46% of credit cardholders carry debt from month to month, up from 39% last year, according to a new report by Bankrate.

https://www.cnbc.com/2024/02/06/credit-card-delinquencies-surged-in-2023-indicating-financial-stress-new-york-fed-says.html

Credit card delinquencies surged more than 50% in 2023 as total consumer debt swelled to $17.5 trillion, the New York Fed reported Tuesday.

Liz Ann Sonders has an interesting theory that doesn't seem to have any factual basis.

[–] [email protected] 2 points 10 months ago

The issue is that people's cost of living went way up but their salary didn't so to buy the same amount of food now is like 4 times as much. People end up running out of money before they get paid again because their money doesn't go very far now and they need to use their credit card to get by for a few days. Keep doing that for a few months and bam 6k in card debt lol.