Allow me to introduce the future over-spenders of America: kindergartners.

That's right, kindergartners. They're a lender's dream demographic: An unblemished borrowing history; a steady income/allowance unthreatened by downsizing; a gig that's pretty safe from overseas outsourcing; and entire networks devoted to programming designed for multiple product tie-ins.

You think I'm kidding. If only.
A few years ago a friend of mine's 6-year-old daughter was deemed creditworthy enough for an invitation to apply for a $5,000 line of credit.

Never mind that her daughter couldn't really count very high or even sign her name legibly in that teeny-tiny box on the back of the card, let alone fill in the right ZIP code on the application.

The most exciting part of the offer by far was the sample credit card affixed to the application. (No accident, I'm sure, but rather brilliant work by a team of highly compensated direct marketers and behavioral economist consultants.)

My friend got worried as her little girl became more attached to the fake promotional credit card. Since credit cards are my specialty, I figured, no problem. I'll teach her daughter some important lessons about credit before bad habits become big debt.

Back in my day you had to be 18 to do that
It seemed fitting that when I arrived for baby's first financial chat I found her outfitting her Barbie doll for a trip to the mall.

Already this little girl knew how to accessorize Barbie like a pro: cute knit dress, boots, a postage stamp-size Prada knockoff purse, Ken, and the glittery new plastic accessory that came in the mail -- the Visa card. (Proportions never really did matter in Barbie's world.)

I started to explain that the credit card was not a toy, but a highly sophisticated financial tool that enables grown-ups to purchase goods and services through a far-reaching electronic network of retailers and lenders.

Her mother, observing in the doorway, rolled her eyes.

I toned it down a notch: "Grown-ups like your parents use it for good. Their credit cards help them keep track of how many ice cream cones they buy, and it saves them time because they don't have to stop at the bank every week before ballet class. But [pause for emphasis and to make the Serious Grownup Face] Visa can also be a very bad thing that makes grown-ups spend more money than they have."

I could see that she wasn't getting it. I tried a different approach. "How much money do you have in your piggy bank right now?"


"When you go to the store to buy Barbie a friend, if you pay for her with your new Visa, her friend will cost $1,087 and won't be paid for in full until you're 43."

"Mommy! I want to buy a new Barbie!"

Let's play "Barbie files for Chapter 11!"
I could see that I needed to break it down into baby steps:

"OK, here's the deal: The credit card man is not giving you the money for free. He's letting you borrow the money. You have to give it back out of the money you get for allowance. The longer it takes you to earn your allowance to pay him back, the more money you have to give him to keep him happy.

"Then one day the transmission on your Honda goes out and the water heater at home decides to follow suit. Suddenly you have to pay a lot of people a lot of money just so you can take a hot shower and get to the SuperStore to buy groceries. Since you don't have the money in your piggy bank to pay them, you give the man with the wrench and the guy with the greasy hands your credit card.

"So now you have this huge Visa bill and an empty piggy bank and all of your friends are going to upstate New York in 10 days for a relaxing weekend. Only now you can't go because gas prices are insane and you decided not to go into PR after college where you could have earned money hand over fist, but, in retrospect, you wouldn't have felt like you sold your soul and ..."

Since kids have a short attention span and I've been around at least three or four kids in my day and can tell when they are getting a little weary from all the "Adult Talk," I decided it was time for Plan B.

"Hey, honey ... let's cut this Visa in two so that it fits into Barbie's purse."


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Dayana Yochim pays off her Visa bill every month, she double-pinky swears! She owns no companies -- or Barbie accessories -- mentioned in this article. The Motley Fool's magical disclosure policy was written by elves. And unicorns.