How NOT to make Credit your Lifeline

Credit and specially credit cards are often touted as the best possible means of achieving your life’s goals. They are often considered a means of ‘empowerment’ that allow you a degree of financial freedom that would hitherto not be possible if you were to spend entirely within your earnings.

However, nothing could be further form the truth since excessive usage of credit cards is a sure fire route to penury. The reason being that financial institutions that offer you credit lines and cards do not do so out of a sense of altruism but hard business sense.

Remember, everything that you purchase has to be paid back, with interest (in the literal sense.) When you are buying that latest LCD (liquid crystal display) TV or brand new car on your credit card, you may not remember that the money that you have spent was not yours to be begin with, but rather a loan that has been given to you so that the lender can make a profit off you in the long run.

If you are not careful, your bills will steadily accumulate and the net result would be incessant calls from your creditors who would be hounding you day in day out so that they could recover their dues. Slowly and gradually, the quality of your life would erode and you would be faced with the difficult prospect of placing your credit card debts as your most important priority. This will make everything else, even basic day-to-day expenses that are necessary to run your household such as food, energy bills, home lease payments, school books etc. end up being on a lower priority level. If this state of affairs continues long enough, you just might end up facing insolvency and may even have to file for bankruptcy.

This means that you would end up forfeiting almost all your property as well as having to face a steep downfall in your overall credit ratings.

Of course, it does not have to be this way. All you need to do is to say no to those glitzy adverts that try and make you believe that credit cards and loans are the panacea of all your financial woes and the short cut to your dreams coming true. If you were to believe that, then there is a very strong probability that the dreams may turn out to be veritable nightmares.

Though it may not be easy at first, but for your financial health it is very important that you get rid of your debts first and foremost. But even more important than that is getting rid of the ‘mindset’ that might lead to a debt trap i.e. using credit in any form as a means of ‘supplementing’ your monthly income. Remember, nothing can be further from the truth since credit is not a supplement but a burden on your existing financial resources.

If you find that your income is not enough for your expenses, then learn to budget your resources till each and every item in your priority list has been catered to and moreover, it has happened without you taking any unnecessary loans.


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