credit

Credit Is One Of Life’s Necessary Evils

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Financial aid officers on college campuses across the United States hand out student loans like candy.  Students barely having reached the age of consent are encouraged to borrow as much money as possible to fund their mere existence.

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Each year money is borrowed with no payments due adding to the students’ debt.  Good deal, until the student leaves school.  Whether a college graduate or a college drop out, payments to pay off the student loans begin.  The erroneous myth that the government will forgive the debt will then be exposed.

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Picture the day after graduation.  For those fortunate enough to have a new career in a chosen profession life should be looking bright.  With that brand new income the graduate can buy a brand new car to drive to work.  That is of course unless they owe more to the Federal government than the cost of a brand new car.  Those folks will continue to drive their grandmother’s old beater.

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Upon one’s twenty-first birthday their mailbox is full.  Not with birthday cards.  But, with pre approved credit card offers.  Creditors smell fresh blood in the water.  They offer consumers the ability to buy what they want and pay for it later.  Borrow five hundred and make a minimum payment of twenty-five dollars.

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It does not take long before young adults are buried in debt.  Credit is one of life’s necessary evils.  Those with a bad credit history are treated like a pariah.  No credit and no cash leave people between a rock and a hard spot.

Before signing on the line know what you are contractually obligating yourself to.  Multiply the payment amount by the number of payments to see what amount you will actually be paying for the item you are borrowing money to buy.  Ask yourself how you will make required monthly payments.  If the numbers don’t add up, don’t borrow the money.

The new furniture you buy today and pay for in the future will be old in the future.  Interest free for twelve months is just that.  If you pay it off within the twelve months there is no interest.  However, those types of loans are banking on the fact if you don’t have the money now you won’t have it in twelve months.  If that is the case you will be liable for interest for the first twelve months and every month thereafter until the furniture is paid in full.  Generally the rate of interest charged is much higher than the going rate.

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The better your credit score the better the interest rate charged.  Don’t borrow more than you can afford to pay back.  Make your payments on time.  Remember salespeople are not your friend.  They are paid their commission for selling you something whether you pay your bills or not.  However, they do not get credit and collection calls hounding them for your payment.

There is a big difference between needs and wants.  A forty dollar smart phone will not have all the bells and whistles of a thousand dollar smart phone.  However, they will do enough to meet many needs.  Granite countertops are really nice.  But, laminate countertops are presentable for a lot less money.

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We must all live within our means.  When we don’t the associated stress makes the material  goodies seem much less appealing.  When credit is no longer an option life becomes a lot more complicated.

 

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