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What You Need To Know About Debt And Credit Cards
By: David Maillie
Copyright 2006 David Maillie
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.
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About Author
David Maillie is a chemist with over 12 years experience in biochemical research and clynical analysis. He is an alumni of Cornell University and specializes in biochemical synthesis for public, private, and governmental skin care interests. He can be reached at http://www.bestskinpeel.com
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