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Is Too Much Credit Really a Good Thing?
By jmh | January 19, 2006
Paying today, tomorrow and the day after tomorrow for what has been used up, consumed, and in many cases forgotten, has consequences. Here are just some of them:
Debt takes dollars away from current consumption. In other words having to service monthly credit card debt takes money away from investing for retirement, building a business, health care for you and your children, education, etc.
Your ability to obtain a mortgage or loan at a favorable rate might be adversely affected.
If you have a high level of credit card debt, you might find that your credit rating has been lowered, even though you pay your bills on time. The quality of your credit rating (your credit score) can have tremendous impact on your life.
The cost of the original purchase skyrockets over time as you pay a small portion toward principal along with interest each month.
Worries about finances might affect your physical and mental well being, cause stress and anguish in your relationships and life.
Ask yourself these 3 simple questions prior to putting your credit card through the machine, regardless of the occasion.
1. Is this purchase really necessary and appropriate for me?
2. How long will I have to work to earn the amount of money the item costs?
3. Is there enough value in this purchase to justify the amount of work I will have to give to get this item?
Now make your buying decision! Make it a habit to ask these questions when out shopping.
Tags: Money & Mind, My Financial IQ
Topics: My Financial IQ, Money & Mind |
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