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| Think Before You Charge It And Go Into Debt |
There are many reasons that you might have to go into debt, but there
are five reasons why you should stay out of debt that are much more important. Going
into debt may seem like a good thing at the time, but who is it really good for
in the long run?
Usually, it is good for the people who have loaned you the
money, because they make their money charging you interest and service fees on
your debt. Here are the five important reasons to stay out of debt, so read
these carefully before you apply for credit cards and car loans.
1. Things that you purchase on credit become very expensive.
When you buy something on credit, it becomes
a lot more expensive than when you buy it with cash. This is because of
interest payments and other fees. Let’s say that you buy a computer for $2,000
and pay it off over the course of two years. If make all of the payments on
time, then you may pay about $2,500 for the computer.
You may say, well it was worth it to have that computer for the two
years I used it.
However, this is not quite how it works. You see, once you pay off
about half of the computer debt, the computer store will extend your credit to
about $5,000. That is when you will see a phone that you can’t live without,
gifts for your family that you have to have, and a sound system that goes on sale
for a price that you can’t pass up. Pretty soon, you will have $5,000 in debt, at
a high interest rate.
2. Once you get into debt, you never get out.
Now that you have a high credit card debt of $5,000, you can
only afford to make the minimum payments. By making the minimum payments, it
can take you up to twenty years to pay off a credit card debt of $5,000. That
is assuming you don’t make any more purchases. So that $2,000 computer can wind
up costing you about $10,000 in the long run.
3. You lose the ability to make choices.
If you have credit at one store, you can get credit at another
store. So when you take your paycheck to make minimum cash payments on one card
you can charge things that you need like groceries and gas on another. You can
keep making minimum payments until everything is at its limit, but then where
do you go? You have run out of choices, except for the choice to work because
you have to pay your debt.
4. You become a slave to your debt.
When you have debt that you have to pay every month, you are no
longer working for yourself; you are working for your debt. You are paying for
things that have long been forgotten. The computer you purchased four years ago
is broken, your clothes are now out-of-style, and you don’t even like your job
anymore. You can’t afford to take a vacation and your whole paycheck goes to
minimum payments on student loans, credit cards and other junk that you can’t
even remember buying. So why not just stop paying?
5. Ultimately, you will ruin your credit.
If you stop paying your debt, you will be free, right? That is
totally wrong. You won’t be able to get a car loan when you need one and forget
about buying a house; you may even get turned down for a job because of bad
credit.
So what is the answer?
The
answer is to be patient. If you have to take public transportation and eat Ramen
noodles every night to save up for something, be thankful. It is a much better
alternative to being a slave to debt, ruining your credit, and living in a
miserable state of mind with all of that money owing hanging over your head.
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