Learn to live with less. Learn to shun envy. Appreciate what you have. If you have less, you will appreciate what you have more.
10 Lies That Landed You in Credit Card Debt
No matter how much most of us try to avoid the temptation to purchase items we really don’t need, we don’t always succeed. We seem to come up with more creative ways to justify making purchases we really shouldn’t. Worse, many individuals fail so frequently and become such adept liars, they find themselves in credit card debt. This illustration lists 10 lies that land people in debt as well as the truths that would keep people out of debt.
# 1 Lie: It’s an emergency!
Truth: If a life isn’t at stake, it probably isn’t a real emergency.
Other than life’s basic necessities, including food, clothes, and shelter (that doesn’t mean lobster, Prada, and a mansion either), there is most likely no emergency that requires you to purchase something.
#2 Lie: We deserve it!
Truth: You don’t deserve to pay interest on your reward, do you?
Look, we all deserve to have nice things and should be able to buy things we don’t necessarily need. However, getting temporary satisfaction from purchasing something isn’t worth the long-term stress of accumulating credit card debt. Limit splurges and pay cash to avoid mounting credit card debt.
#3 Lie: It’s a bargain!
Truth: Great deals come and go. It’s not a bargain after the interest payments.
These days, you should have no trouble finding bargains. Even when times are good, businesses mark down merchandise constantly to reduce inventory levels. Don’t buy unless you have the money on hand and it’s something you actually need.
#4 Lie: It’s not much money.
Truth: Over time, enough small charges on the card can grow into a mountain of debt.
Thanks to the magic of compounding interest, those small purchases quickly grow up to become expensive purchases and you end up paying much more than the item is worth.
#5 Lie: The payment is small.
Truth: Remember, the payment may be small and manageable at first, but buy enough on credit and the payments grow substantially. On top of that, you still have to pay back the borrowed amount with interest.
Again, the initial purchase may not be that expensive. But when you add up all the small expenses and add in the money you’re paying in interest, you end up paying a lot of money and getting little in return.
#6 Lie: The card rewards make it worth it.
Truth: But if the allure of these rewards is putting you deeper and deeper into debt, they just aren’t worth it.
Rewards from credit card purchases are very attractive and make consumers use their cards more frequently. That’s the only reason credit card companies offer rewards. However, once interest is factored in, you end up paying more for those rewards than they’re worth.
#7 Lie: Offers of 0% APR on purchases
Truth: Once you’re hooked, prices go up, way up. Once the 0% APR introductory rate expires, interest rates can easily soar into the double digits.
This is yet another way credit card companies convince consumers to use their cards. They prey on shortsighted consumers who see only the money they’ll save up front, not realizing they’ll pay huge sums in the near future.
#8 Lie: Offers of 0% APR on balance transfers
Truth: Balance-transfer-offers can be great, but just like the 0% APR purchase offers, make sure you pay off the debt before the 0% APR offer expires.
This is how credit card companies convince you to switch to their card. However, unless you pay off the balance quickly, the APR will skyrocket.
#9 Lie: It’s for my business.
Truth: All small-business owners have to decide for themselves, of course, just how necessary an expense is, but with business credit cards, it can be easy to spend more than you should.
When you own your own business, it’s easy to justify spending more money than you have on hand to help your business grow. However, unless you have a strategy for paying off the debt quickly, your business will be out of business.
# 10 Lie: I’ll pay it off after graduation.
Truth: Do you really want to start out in the workforce in the hole?
College students are known for their lack of financial resources, making them ideal targets for credit card companies. It’s easy for college students to justify purchases by convincing themselves they’ll pay them off as soon as they get their first job. Unfortunately, it’s usually not that easy. The interest grows quickly and it becomes difficult to pay off the debt when the interest continues to accumulate.
Don’t help the credit card companies take more of your money by telling yourself these lies. Instead, practice discipline and purchase only the things you need and can afford to pay for at the time of purchase.