Use credit wisely

I was in the electronics chain store the other day buying a jump drive that was on sale. While I was waiting in line there was a family in front of me. It was a young couple. The man had what looked to be some sort of service outfit on he could have been a cable or satellite dish installer. The woman had a really worn out pair of jeans, an old jacket and tee shirt. They had two boys, one about two maybe three and the other about four years old. The older boy's clothes were too small and badly worn. The younger boys were too big and worn out. They obviously were hand me downs. I looked in their cart. In their cart were a CD player and about 30 CD's. There was a long line to check out and as we got closer to the counter the man looked over to the side at a rack of CD's and said I like this one too. And soon there were three more CD's put into the cart. The woman appeared worried. I could not take any more and told the guy with a smile "I bet you can get those CD's online for about half of what they charge here." His response was that he wanted to listen to them tonight.

This family finally got up to the cash register. I watched as the woman behind the counter as she rang the items up. A woman seemed to appear from out of nowhere and handed the wife / mother a coupon to take 4 dollars off one of the CD's. As she handed the casher the coupon the man stated "Why do you waste your time with that?" The total came to just over 600 dollars and the man took out his wallet and began to swipe his credit card. The first one was rejected as was the second and third. Finally he took out the fourth card. When I saw him bring the card out his wife sighed (nooo!) turned and began to cry. The credit card had been accepted. The goods were placed in a bag and off they went. I bought my six dollar jump drive and went home.

I bring up this story as an extremely bad use of credit. Live within your means. I'm sure the guy in this story was not thinking about how many hours he would have to spend sweating on top of roof to pay for those CD's. To say nothing about what he cared about his wife and kids. If you cannot understand that paying with a credit card is the same as paying cash out of your wallet tear it up and pay cash. If you really want something shop around. By then you may decide you really do not need it. I'm going to bet the credit card companies are not going to extend this guy and more credit. I suspect the couple will have to go bankrupt. I'm sure if they do not declare bankruptcy that they will end up paying 50 dollars per CD after interest penalties and fees. Can you imagine the look on the guy's face if he had to shell out 2500 dollars plus for those CD's that night? The truth is he could not have afforded to spend as he did. The taking out of a credit card made his purchase painless to him for the time being.

How can you apply this in your life? It's nice to get 5 percent back on your gas purchase but are you driving more as a result? Or how about 10 percent off of your trip to the restraint you can't afford anyway! Credit cards are very nice if used properly. They can minimize the need to carry cash, provide a record of where money was spent, and provide cash back incentives. Many internet purchases which often save money, time and transportation costs would not be practical without a credit card. To use a credit card responsibly you should be able to visualize your spending of cash when you use one.

Think about how much a credit card purchase is really costing you! Some stores give you 10 percent off when you charge it on your store credit card. That is a great deal until you realize they are hitting you for 25 percent interest.

When you take out that credit card think of how many hours you must spend working to pay for what you are about to spend. Perhaps you do not need that item at all!

If you manage your credit effectively you will use your dollars more effectively and improve your standard of living. You will be able to save more money and invest it wisely.