Have you ever written a check for something that you knew you didn't have the money for? People do that more than you think. They play the game of "robbing Peter to pay Paul". This is a common practice that can lead to debt and bad money management.
When you take a job, you are given a salary. The salary only changes if you get a promotion. For those that work an hourly wage, the amount of your check changes if you work more or less hours each week. Despite our paychecks being fairly consistent, people continue to spend more money than they earn.
One cause of this is the "buy now and pay later" trap. Knowing that the first payment is two years away gives consumers a false sense of security. They may have walked into the store to purchase a bed, and end up walking out with the entire bedroom set because they don't have to make payments until 2009! If you didn't have the money to purchase more than a bed in the first place, what is the logic of purchasing furniture worth three times that much? In two years you may still not have that much.
Credit cards can also be a trap if not used with discretion. Statements come at the end of the month. Erroneously you might think that although you don't have the money now, you will have it when the bill comes due. The problem with this thinking is that you haven't figured in the budget the money you just charged to the card.
Once you pay the other bills, there won't be enough to pay the card balance so you pay the minimum. An unpaid balance on the credit card results in a larger balance next month even if you don't charge anything else.
Most people are not interested in learning how to better their finances. They find themselves faced with filing bankruptcy which is a terrible blow to their credit. There are financial advisors available to help people learn to better manage their money. However, very few people avail themselves of these services.
Credit cards have become the trend. It is acceptable for most people to have more debt than they could possibly pay. They are content to make the minimum payment amount each month and watch interest and continue to mound with no hope of paying the entire balance in the near future. This attitude leads to serious financial problems.
This vicious cycle will continue until we decide to make a change. If we continue to mishandle our money our children will learn to do the same thing. And credit card companies are happy for the trend to continue as they rake in huge interest charges and fatten their pockets.
When you take a job, you are given a salary. The salary only changes if you get a promotion. For those that work an hourly wage, the amount of your check changes if you work more or less hours each week. Despite our paychecks being fairly consistent, people continue to spend more money than they earn.
One cause of this is the "buy now and pay later" trap. Knowing that the first payment is two years away gives consumers a false sense of security. They may have walked into the store to purchase a bed, and end up walking out with the entire bedroom set because they don't have to make payments until 2009! If you didn't have the money to purchase more than a bed in the first place, what is the logic of purchasing furniture worth three times that much? In two years you may still not have that much.
Credit cards can also be a trap if not used with discretion. Statements come at the end of the month. Erroneously you might think that although you don't have the money now, you will have it when the bill comes due. The problem with this thinking is that you haven't figured in the budget the money you just charged to the card.
Once you pay the other bills, there won't be enough to pay the card balance so you pay the minimum. An unpaid balance on the credit card results in a larger balance next month even if you don't charge anything else.
Most people are not interested in learning how to better their finances. They find themselves faced with filing bankruptcy which is a terrible blow to their credit. There are financial advisors available to help people learn to better manage their money. However, very few people avail themselves of these services.
Credit cards have become the trend. It is acceptable for most people to have more debt than they could possibly pay. They are content to make the minimum payment amount each month and watch interest and continue to mound with no hope of paying the entire balance in the near future. This attitude leads to serious financial problems.
This vicious cycle will continue until we decide to make a change. If we continue to mishandle our money our children will learn to do the same thing. And credit card companies are happy for the trend to continue as they rake in huge interest charges and fatten their pockets.
About the Author:
Tire of struggling to keep up with your credit card debt? Learn some simple credit card tips on the Debtopedia website. Visit http://www.debtopedia.com for a free copy of my "Secrets Of Credit Card Debt" report.
No comments:
Post a Comment