"Credit cards - it's like negative money."

My 15-year old son is very close to earning his Eagle award in scouting.  He's currently completing the requirements for the "Personal Management" merit badge which includes learning about checking and saving accounts, loans, credit cards, charge cards, debit cards, budgeting and many other aspects of personal finance.

I began by teaching him about checking accounts- the money you earn goes in there and then goes out to pay bills as you write the checks.  When you spend it all, there is none left.  I then explained that with credit cards you don't deposit money...you can buy things on a credit line and pay it back.  He immediately exclaimed "oh it's like negative money!  You're spending money that you don't have." 

I was ecstatic that he saw the reality of this and was able to distill the danger of credit cards into a new idea - "negative money."  After all, who wants negative money?

If everyone had this clarity there would be fewer people carrying credit card debt paying interest at 18 percent or higher and there would be fewer credit card companies offering free beach towels to students on college campuses who risk serious debt troubles down the road.

For more perspectives on credit debt see the movie "I.O.U.S.A." and this Steve Martin skit from Saturday Night Live.