I have a friend who got a small raise last year. He already owns his own home, but a significant portion of his income is going to paying the mortgage and utilities. The remainder goes to covering food for his wife and kids.
Over the past year he has grown increasingly frustrated because he has seen his neighbors go out and buy new cars, get new TVs and all the cable channels to go along with it. He doesn't want his kids to go without so he went ahead and took out a credit card so he could buy those nice things for them. He doesn't want them to go without simply because he doesn't have the money to pay for them.
To reward himself for doing such a good thing for his family, he went out and signed a lease for a brand new Mercedes-Benz. It's top of the line with all the bells and whistles.
Unfortunately, he quickly discovered he didn't have the income to pay for his mortgage, utilities, food, clothing, minimum payment on his credit card, and this vehicle. So he opted to use his credit card to make the car payments.
Within a few short months he had pushed his credit limit near the max. He knew that without an extension to his credit limit, next month he would not be able to continue paying for the car unless he stopped paying the minimum on his credit card or cut back in other areas, which might mean his kids don't have the things their friends have.
When he called Visa for the extension they ran his credit. They informed him they would not be able to increase his credit unless he cuts back on his spending.
This did not make my friend happy. He demanded they increase his credit. He said he can't be allowed to default on his car lease because that would hurt his credit score and prevent him from getting future credit. He was worried it might also trigger interest rate adjustments in his mortgage loan or worse, land him in court as the target of a lawsuit.
My friend thinks he does not have a spending problem. He says that just increasing his credit line doesn't mean he will actually increase his spending because all he wants to do is cover the expenses he has already committed to pay for.
What can he do to get the credit he needs or to get out of this situation?
Oh yeah, it's not really my friend I am talking about, it's my country...