Wonderful, accessible, way-too-easy-to-get, way-too-had-to-pay-off, credit.
It makes the world go around and sometimes makes our head spin. It can be our best friend or our worst enemy. Using it gives you a temporary high. Owing it gives you a log-lasting headache.
Where am I going with this you ask? I shall tell you.
We are all one or two events away from bankruptcy – meaning all it takes is one or two major events to turn our financial world upside down. The reason is simple. We live too close to, or above, our means. As a result our credit is maxed out, our savings minimal, or worse, non-existent, and we have absolutely no breathing room.
If you’ve found yourself in a cash flow crunch for an extended period of time, you may have noticed how much it costs to be broke. If you haven’t noticed, please let me enlighten you.
Seriously, why do you have more than one credit card? The likely answer is (although I’m sure many won’t admit it) “so I can spend more money than I earn”. The intentions might be good (buy necessities, pay for the kids sports, buy gifts) but the results are the same (if you consistently spend more than you earn, you will eventually hit a financial brick wall, and your finances will crash). This might mean something as drastic as losing a home or something less severe like paying for a decade or more for living above your means for a few years.
I think credit should come with the above warning. We tend to be overly-optimistic when it comes to using credit. The warning signs are easy to recognize. we can afford that loan because I’m...
What amazes me is the way our relationship with credit has changed. It used to be that we used credit sparingly for things like a mortgage or car loan. Households maybe had one credit card; two was pushing it.
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