All You Need To Know About Credit Cards And Debt
Debt Is All Around Us And Getting Worse Every Day. Recently congress
enacted a tougher law on bankruptcies sponsored by the banks and credit
card companies. It is designed to make it much harder for you to get out
of a debt. Instead ways will be made so that you can and do pay off your
debts. What ever happened to the wise sayings of our grandparents and
elders saying things like “Don’t use credit cards”, “Don’t buy what you
can’t afford”, “If you can’t pay cash then you can’t afford it.” Yes
there are medical emergencies and things like that, but according to the
Consumer Debt Council, 98% of debt is avoidable and even wasteful and
extravagant. Also most of the debt we have can be removed with careful
planning and patience.
First we have to define debt into two categories, good debt and bad debt.
Good debt is an item like a house or mortgage that will increase in
value. Bad debt is that 50” flat screen TV you bought on your credit
card and are paying the minimum balance on – ouch. In most areas except
Los Angeles and NYC where houses are so astronomically priced that you
have to be a millionaire to afford one a house is a great buy. You lose
money on rent, whereas it goes toward your principle in a mortgage.
Basically, a mortgage is a forced savings plan and it far outweighs any
savings account interest. So, with that in mind, if you are renting and
don’t live in Los Angeles or NYC buy a house. It is now a buyers market
and great deals can be found.
What everyone needs to do, is rip up any store cards and credit cards
save one. Mark this one for emergency use only. If you have a balance,
and most people do as the average credit card debt is now between 9 and
10 thousand dollars, make a plan to pay it off as quick as possible.
Paying the minimum will make it so you can end up paying 3 times the
original amount. If you thought of what the end total you will pay for
an item than that alluring 10 percent off todays purchases may not sound
so enticing. What if congress made it so credit card and store card
offers had to tell you what you would pay with interest if you only paid
the minimum balance on your purchase? Fewer people would take advantage
of the store card and over extend themselves.
We do have to change our spending habits, but we also have to change our
attitudes and behaviors towards debt. According to RIT’s consumer finance
expert, Robert Manning, there is too much negative debt.” College
students are now graduating college with an average debt load of $25,000
after only four years of school. This is also the starting average
salary for those lucky enough to find a decent job in the current
economy. TV commercials are constantly telling us to buy, buy, buy. We
need to stop and say no. We have to stop thinking of the present and
instead think of the future. 95% of consumers feel buyers remorse after
splurging on nonessentials. What does that tell you? We need to stop
and think – “Do I really need that?” If we stop and think about it
before we buy a extravagance we don’t really need we can save ourselves
from much stress and hardship. Just think of how nice your life would be
without any debt. If at any time you feel you are in over your head,
call a non profit consumer debt agency. It is best to call the local
Better Business Bureau and enquire first as they keep tabs on these
groups.