It comes around every so often for all of us. You break out the scissors having concluded that it's time, once again, to cut up those credit cards weighing down your wallet. And each and every time we do it, it's always a wise decision. If that's not where you're at right now, maybe you should be.
Despite all of the rhetoric spouted off in fancy TV, magazine and Internet ads about all the financial freedom credit can provide to buy what you want, and do what you want, the truth is that credit cards are the enemy. In reality, they are really destroyers of financial gain and freedom. They'll cripple you long before they'll help you along to any happy goal.
Another problem with them is that credit cards also send out false economic indicators that consumers have real money to spend. That consumers have real money to cover the debts they rack up with them. The recession we're in now is proof enough that that was far from the case. During the boom people were using new debt to pay off old debt, and so went the vicious cycle. Our time was as borrowed as the money we were using to buy a bunch of crap we really didn't need anyway (most of it made in China, mind you).
At the end of the day credit cards are akin to horrible, taloned monsters that lurk deep in the shadows, lying in wait sneering just at the brink of eye shot, with their deviant little bag of tricks ever at the ready. Like all monsters, they thrive best when you can't see them. When you just barely know that they are there. Jumping out and yelling "boo!" is not only easy stuff. It's a dead ringer. Monsters rather relish in taking little bits of you until finally, one day, they've got you but good.
My wife and I are again credit card free. We've done the scissor deed. The little plastic bits have been banished to the local landfill, maybe even this time for good. Granted, that's not to say that we're debt free. We still have the balances to pay back. But the ability to access the credit we were able to before has heretofore been removed from the equation. The option to use the credit is no longer in the cards, if you'll pardon my pun.
Part of what made the decision for us, is that the credit card companies have suddenly decided to punish everyone for the credit crunch. They've decided it's now up to us, the consumer, to pay for mistakes that they (the banks—and oh yeah, that bozo Barney Frank too) have made by arbitrarily increasing interest rates, adding on fees, and changing the overall terms as to how they'll apply your payments. First the government was supposed to cover their failures. Now they want the customer to do it too. And as taxpayers as well as customers, that's a double kick right square in the face as far as I am concerned, and it'll be a cold day in hell before I allow them to do it. It should be a cold day in hell for every American who has one of these little plastic monsters nibbling holes in the fabric of their financial security and dreams as well.
The secret is in creating real wealth and real money. It's in saving and using money we actually have. Cash, not credit, is freedom. It's power. If you don't have it, the monsters have got you.
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2 comments:
What is your opinion when financial advisors tell you not to close your accounts once they are paid off so that it won't negatively affect your credit score. Or that using your credit card and then paying it off at the end of the month also builds your credit score. I say it's too tempting to only pay the minimum once you see your statement at the end of the month. If you don't have the cash now, what makes you think you will have it at the end of the month. :)
People rely too heavily on credit, and therefore they rely heavily as well on a credit rating. I understand the negative implications of a lower credit score—for example, it might cause an offered mortgage rate to rise a few basis points. But you shouldn't be making any financial decisions based on a consequence necessarily. You don't make stock decisions based on tax condequences either. Money that sits in a bank account or that is invested in the market generally generates income. The other plus is that people can borrow, secured, against their own funds for far less than any credit card company. For example, you can get a secured loan for about 2 or 2.5%. Most people don't realize this. The first time I got caught up in the credit card monster's lair, I was paying $500 a month just to pay them off. I thought to myself, if I can "find" $500 a month to make the payments that I didn't apparently feel I had to make the original charges...there's something wrong with that thinking as well.
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