I heard the add on the television. It claimed that the average American family has $8,000 dollars of credit card debit. I found this figure just astounding. We owe a few hundred dollars on a card after an unexpected family expense. Could people really owe this much. I made an unofficial study and found that in many homes in which both parents work full time often really do owe this much. Their debt frequently matched the second income., which got them the credit in the first place.
I feel very sorry for people in these situations as they remind me of the share croppers of the old south or the peasants of the old world. Like miners who owe the " company store" they borrow to produce a basic living hoping for a better day which never comes. Because of the high interest on many of these cards often close to a quarter of the initial amount. Many have hidden fees and other charges which quickly add up to rates which are similar to those of loan sharks. So if a person with several thousand dollars of debt pays just the minimum payment month after month, they are only covering the interest on the loan and not the principal amount.
They can never get out of debt.
Another feature of the "new economy" is Rent-By -The-Week type places which charge a relatively low weekly fee, but when added up over a year a person pays seven hundred dollars on a TV worth a couple hundred. If they had only saved the money, or made installment payments on a sale price lay away, they would save lots of their money for other things.
If you find yourself in any of these situations the best solution is to pay the item or card off as quickly as possible. Always pay more than the minimum balance due even if its just a dollar. At least you’ll feel month to month you are making progress. The day you’ll be out of debt will come that much sooner.
Another thing people forget is that these expenses are not static. Once you pay off the card(s) or item you don’t owe that amount anymore. You have that money available to spend on some other expense or to save for a stated purpose.
In our culture since one needs a plastic card to buy online you can
1) get a Debit card with either a Master Card or Visa logo on it. These cards take the money right out of your checking account like writing a check. That way you have the convenience of plastic without interest charges.
2) If you need real credit consider getting one of those cards which are created with a savings account that advances credit double the amount in the account. These are real credit cards which charge interest on the borrowed amount.
Good luck in this credit crazy world. Don’t become a new share cropper!
For inspiration check out sample pages by other frugal authors at:
Complete Tightwad Gazzette
The Complete Tightwad Gazzette
Declare Your Finanacial Independence
Declare Your Financial Independence
Complete Cheapskate
Mary Hunt's Complete Cheapskate
Miserly Moms
Miserly Moms
You Can Afford to Stay Home With your Kids
You can Afford to stay Home WIth your Kids
