Posted: Fri Mar 07, 2008 3:32 pm
Interesting topic, and one that really doesn't get enough attention.
Credit card debt is nuts. If you have any, do whatever you can to get rid of it. If you don't have any, avoid it like the plague. Of all the ways there are of borrowing money, a credit card is near the bottom of the list, just above the "payday loan" sharks. Just about all credit card agreements give the banks enormous power to change the terms whenever they like. The end result is that a small financial problem can turn into a huge one if you have CC debt hanging over your head.
That said, I have a couple of CCs that I use regularly. I don't charge anything on a card that I can't pay off at the end of the billing cycle. The regular on time payments keep my credit score looking healthy. This requires a bit of financial discipline, so if you can't do that, you should probably get rid of the cards.
The less debt you have to service every month, the more money you can put into your own pocket. If you can avoid acquiring debt in the first place, you're well along the way to financial security. This means doing things like buying a used car (or bike) that you can pay cash for, rather than a brand new one. Do that for a few years and you'll save enough on car/bike payments to pay cash for a new one (if you must have one). It can be done, and in the long run, you get to bank all of that interest you would have been giving away.
Lastly, live below your means. Financial stability is not something that you can't get because of your income level. It has more to do with one's attitude towards money, rather than how much they make. I work with people making in excess of $100K/yr. who would be at serious risk financially if something happened (i.e. long term illness, job loss). They are just getting by every month servicing debt on darn near everything they own. They can't look forward to retirement anytime soon. If you don't make a commitment to live below your means early on, it won't get any better when you're making more money in the future.
Credit card debt is nuts. If you have any, do whatever you can to get rid of it. If you don't have any, avoid it like the plague. Of all the ways there are of borrowing money, a credit card is near the bottom of the list, just above the "payday loan" sharks. Just about all credit card agreements give the banks enormous power to change the terms whenever they like. The end result is that a small financial problem can turn into a huge one if you have CC debt hanging over your head.
That said, I have a couple of CCs that I use regularly. I don't charge anything on a card that I can't pay off at the end of the billing cycle. The regular on time payments keep my credit score looking healthy. This requires a bit of financial discipline, so if you can't do that, you should probably get rid of the cards.
The less debt you have to service every month, the more money you can put into your own pocket. If you can avoid acquiring debt in the first place, you're well along the way to financial security. This means doing things like buying a used car (or bike) that you can pay cash for, rather than a brand new one. Do that for a few years and you'll save enough on car/bike payments to pay cash for a new one (if you must have one). It can be done, and in the long run, you get to bank all of that interest you would have been giving away.
Lastly, live below your means. Financial stability is not something that you can't get because of your income level. It has more to do with one's attitude towards money, rather than how much they make. I work with people making in excess of $100K/yr. who would be at serious risk financially if something happened (i.e. long term illness, job loss). They are just getting by every month servicing debt on darn near everything they own. They can't look forward to retirement anytime soon. If you don't make a commitment to live below your means early on, it won't get any better when you're making more money in the future.
