Elizabeth Davies: Help kids fend off spending bug

Admit it: You've already got that rebate check spent.

The minute you heard George W. would send a few extra greenbacks your way, the fantasies began. You were buying a new sofa, vacationing on the beach, shopping for new cars and investing in a laptop.

The government didn't have to think hard about how to get the economy rolling: We're Americans. We spend. Give us money, and it doesn't spend enough time in our pockets to burn a hole.

In this country, we have a love affair with plastic. Charge it, six months no interest, don't leave home without it. This is a relationship that has gotten U.S. consumers in big trouble: Credit cards may only be a few inches long, but they have the power to devastate. They give us what we want, but take away so much more.

Consider this: As many as 2.5 million people seek credit counseling every year in an effort to avoid bankruptcy. In 2007 - a pretty mild year, as bankruptcies go - about 800,000 people had to file. To put that into perspective, that's roughly half of the number of kids who graduated from college last year.

Indeed, we Americans like to spend more than we earn: The average household carries nearly $8,500 in credit card debt, according to money-zine.com.

Consumer debt today is nearly five times greater than it was during the Reagan administration. It's 100 percent greater than during the Eisenhower administration, when the first widely accepted credit card was introduced.

It strikes me as odd that the credit card is only 50 years old, yet it has so transformed the American culture. Credit cards hold our hotel rooms, print our airline tickets and let us check out at Amazon.com. They let us buy the jeans we really don't need from the Gap, and make last-minute impulse buys in the flat-screen television department.

We don't even think twice about those twice-weekly "You've been pre-approved!" letters that arrive in the mail. Most of us throw them away, although they apparently attract enough new customers to make the mass mailing worthwhile to credit card companies.

I have one friend who so dislikes credit cards that he actually runs those solicitation letters through the shredder and then mails them back.

And don't get my husband started on credit card companies. He usually launches into a lengthy tirade starting with: "It should be illegal …"

Now, I like to peruse the pages of JCrew.com just as much as the next girl. But even I know that gorgeous eyelet dress won't still cost $185 when it's still on my credit card bill six months from now. In fact, I will have paid closer to $200 for that dress - which probably would have gone on clearance by then anyway.

It's unlikely that credit cards are going to vanish from our have-it-now world. But one can hope that better financial education for younger consumers will help them avoid a never-ending cycle of leasing BMWs, mortgaging to the hilt and still spending their life living paycheck to paycheck.

They could actually tuck some money aside for emergencies, build their retirement accounts when they're young and pay their credit cards in full every month.

Now that's priceless.

Elizabeth Davies' column runs Thursdays.