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Personal Finance -
Credit Cards
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Written by Omie Ismail
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Thursday, 17 September 2009 11:21 |
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Page 1 of 3
It used to be that debt was truly a four letter word. If you had debt on anything but your house, there was something wrong with you. Then came the financing revolution that let you borrow for everything from cars, to boats, education, vacations, and even cosmetic surgery. Even groceries can piled onto your credit card balance. With the proliferation of credit cards with higher limits, some households purchase virtually everything on credit. A massive acceleration of the instant gratification lifestyle took place with people pulling forward 3 to 5 years of purchases with nothing more than a slide of a little plastic card.
Suddenly, borrowing to purchase became the norm and the stigma was gone. When I graduated from college, I needed to take a last minute loan to get my degree. At the time, it was an enormous sum, over $10,000 at a hefty 8.99% interest rate. Some people will tell you that taking a loan for an education is smart investment. Don’t believe them - debt is debt and unless it comes with permanent zero percent interest, its bad (For a very short list of not so bad debt, read: The Only Good Debt in Town). I hated that loan and the day I started my first job I resolved that I would get rid of it, fast. I got paid a whopping $24,000 in my first job, not exactly top dollar in 1994, but my job had one thing that let me get on top of my loan - - Overtime. Paying my loan off was my first priority and 4 months later, it was done. Yup, it was a lot of overtime. But if I guy making $12 an hour can get rid of a $10,000 debt in 4 months there’s hope for everyone.
The thing is that I really, really hated my loan. Sure I was a hard worker, young and eager in my first job and much of my motivation was to prove myself, but I absolutely detested being in debt. People are often numb to debt. For me it was easy, I was going from debt free to enslaved in a very short period of time. Once you are in significant debt, its really easy to add more onto the pile. People no longer believe that they can get out of debt and so they continue to pile on as much as the banks will let them.
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