Andy note: "Best of Eddie" - while Eddie is on vacation we're throwing up some of his classic posts from the past. This one from June 2010 is part of the very popular "Sell Your Options" 5-part series. More to come later this week & next. If there's an old post from Eddie you'd like to see up again shoot me a message.
Unsecured consumer debt is a relatively new phenomenon in our country's history. Believe it or not, I can remember a time before Visa. When I was a little kid, credit cards were so rare that most businesses didn't accept them (debit cards didn't exist either because, well, ATM machines hadn't been invented yet). The mere suggestion of paying for a restaurant meal on credit would have precipitated a sound thrashing from a member of my parents' generation.
But the popularity of consumer credit grew quickly in the 1970's. Before, there was only American Express (a "charge" card that had to be zeroed out each month), Diner's Club (for the wealthy), and MasterCharge. MasterCharge was the first company to really market revolving credit to the masses. When Visa came on the scene in the mid-70's, MasterCharge became MasterCard and the ensuing competition between the two buried America in a mountain of revolving debt over the subsequent three decades.
The majority of Wall Street Oasis readers fall into the "Millenial" generation, made up of those people born between 1980-2000. This generation is also perjoritavely known as "Gen Y", and the people who refer to it thusly usually do so to point out what a shiftless bunch of fuckwits you guys are. Nothing could be further from the truth. You were, however, raised by a generation (in some cases mine) where bad fiscal behavior was more or less institutionalized and a buy-it-now-pay-for-it-later mentality prevailed.