Thursday, February 16, 2012

Is Debt Controlling Your Life?

When you see a pair of amazing shoes that would go perfectly with that dress in your closet, do you just have to buy it? I know, I know it's tempting. My first question to you would be, what are you even doing in the mall? Maybe you're window shopping or maybe you went to the mall for another reason and ended up in Nine West. Whatever the reason is, do you really need those shoes? More importantly, is that purchase going on your credit card? If so, are you telling me that you are going to borrow money from the bank to buy a pair of shoes that you may not even need? I can hear you saying, I'll pay it off within the month, so I don't pay any interest. According to Consumer Reports Magazine only 54% of consumers pay their credit card balance in full each month. Which means there is still a large group of consumers who carry balances.

This is my take on credit card companies.
Most credit card issuers are banks. Do you ever notice how large and nice the office buildings are of these banks that offer you credit cards. Have you ever thought of how and where they get the money to buy or lease these beautiful 50 storey buildings? I am sure you know where I am going here. They get the money from you. For every debt you have with one of these companies, they're receiving interest from you. That's what they use to run the bank. I haven't even addressed late payments and annual fees that banks charge to take more of your money away from you. According to a survey released by a national consumer credit counseling group, nearly 34 million Americans admitted they have been late making credit card payments, and about 18 million people say they've missed payments entirely. That's a staggering number of consumers that make late payments.

I would like to challenge you this week to plan your purchases. If you need something in the mall, know exactly what you want to purchase before going to the mall. Go with a list, so you go shopping with a purpose. I wrote a previous blog on the importance of a list and the strategies store owners use to keep you in their stores. Please don't fall into their traps, I have fallen into them many times.

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