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Plastic Debt
By: Tom Justice
The Debt
In America, it is not only accepted that the majority of us are knee-deep in
credit card debt, it is normal. Two generations ago it was just flat out wrong -
a sin, to have any kind of debt at all. Today it is quite a different story and
credit card debt is a mega, multi-billion dollar a year industry. The major
credit card companies are eating it up like hotcakes and our credit reports are
taking a lot of the heat. More than 75% of all college students are in credit
card debt within their first year of school. From Sears to Visa to Diner's Club,
people are adding to the debt stock pile that the distributors thrive off of.
There are tens of thousands of websites that support and offer more to this
enormous problem and it has got to stop! We have to draw the line individually,
because there are no boundaries on the excessive spending in America.
What's Really Happening
It's even stated in the Bible - "The borrower is slave to the lender." In any
case, where you have taken out credit on something; be it a car, mortgage,
student loan, credit card, etc..., you are borrowing money. Not only that, but
you are borrowing more money than you need. The average APR (annual percentage
rate) on a credit card is 19%! In many cases, when a credit card is "maxed out"
you will pay only interest with the minimum payment. As if this wasn't enough
stress, the creditors harass you like their life depends on it and you begin to
feel uneasy about even answering the phone.
Is Debt Consolidation the Answer?
Many consumers are drawn in by debt consolidation loans. It feels like instant
relief and the monthly payments go down. Suddenly you feel like life is getting
better by the minute. Oh and what's this, there is left over money from the loan
- PERFECT! You needed this for that yard project or supplies or something that
you've been waiting to have the extra money for. Why not reward yourself, you
have taken a big step and your financial future is improving. Or is it? The fact
is that you have fallen into another trap. You are now borrowing more money with
an interest rate and you most likely got more than you needed. Statistics show
that even though the math often works for a consolidation loan, the consumer
ends up with his ears nailed to the wall.
What to do Now.
STOP BORROWING MONEY! This would be a good first step. Stop right now. Do not
borrow a dime. If you don't have it - don't spend it. You can build up an
emergency savings account to pick up any negative events that may occur. This
emergency savings account is of course another article but you get the basic
idea right? Oh, you still feel you need plastic in your wallet? Get a debit
credit card. At least with a debit card you can only spend what is in your bank
account. You can also use most credit card debit cards just like a credit card
for purchases. Your credit report will begin to reflect this positive behavior
because there will be no more credit card bills piling up. Here is a saying to
ponder before you think of making another large purchase - "If you can't afford
it, don't buy it. If you can afford it, sleep on it."
About the Author:
Tom Justice is the webmaster for Clean Credit Online and does all the designing,
marketing, SEO and maintenance for the site. He has a passion for personal
finance and how the economy and consumers are affected by money. To see how you
can use Clean Credit Online to help you with your personal finances please visit
http://www.cleancreditonline.com
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