Most of us use plastic to make purchases. We’ve lost touch with the value of money. Back in the day, a person would go to the bank and put $40 in your pocket then 2 days later it was all gone. Some purchases along the way weren’t made because you didn’t have enough money left to be able to make the purchase.
Today with plastic, either debit or credit cards, there’s no ‘feedback loop’ to your purchasing habits. Therefore the tendency is to overspend. If you’re using a debit card you do have some feedback as your account reaches zero or you go into your line of credit. With credit cards, the only feedback you get is when you get your bill at the end of the month and at that point it’s much too late to do anything about it. Some people are more embarrassed to admit the balance on their credit cards than their age or weight. The reason it’s hard to do anything about credit card debt is that some view it as a failure or weakness of character. People who spend too much are accused of living beyond their means, shopping too much and indulging in a life they can't afford. Credit cards make it easy to shop without thinking. Countless studies show that spending with plastic means that we spend more. Not only do we spend more, we actually pay more for the same item. When we use plastic rather than cash we give in more to our wants (temptation of the moment) rather than looking for the best deal on the same item. Credit cards are an easy way of supplementing your income and allowing you to lead a better lifestyle or maintain the same lifestyle when family income drops or there is a job loss, relationship breakdown, health issues, etc. Minimum Payments Add Up The majority of people, more than 75%, do not pay their credit card debts off in full each month. Most cards, despite their incentives like loyalty points, charge interest rates close to 30%, regardless of your credit score. For people using credit cards to finance purchases, there is a potential of becoming delusional about the lifestyle that we can afford to live and those people can end up paying too much on the debt that they have and lose the chance to help other people learn from their financial management mistakes. People are reluctant to seek help through credit counselling as they are afraid of relatives and spouses finding out and they fear that they would be judged. Choose a Debt-Free Lifestyle Getting your finances under control and staying relatively debt-free is a lifestyle choice. Commitment to live debt-free means getting your spending under control by cutting back on shopping trips, nights out (bars and restaurants), impulse buying and living beyond your means (your employment income). Maybe you’re ready to make this step, but how can you possibly do it when a significant portion of your monthly income is being used to just make unbelievable payments on your current overwhelming credit card debt? With interest rates pushing 30% and a look at your credit card declaration saying it’s going to take you about the 30 to 50 years to pay off these debts, credit card debt can be stifling. If you’re truly committed to getting your credit card spending under control, Moses Advisory Group Inc. in Edmonton offers credit counselling services and can assist you in putting together a proposal to your creditors that will allow you to pay off that creditor debt in a reasonable manner and timeline, while still leaving you enough money out of your pay cheque to meet your normal living expenses. Give us 30 minutes of your time and we will review your options and show you how you can embrace your desire for a lifestyle change.