Young people seem to be confusing assets and debt. Some are implementing potentially dangerous thoughts regarding credit as it relates to creating debt. While at a car wash the other day, a young man and I struck up a conversation about credit. He was wondering if I knew why some of the creditors will give his friends their money, yet because he hasn’t reached a certain income level, they are not allowing him access to all of his. He didn’t understand that credit is debt.

Isn’t that a perplexing strange way to think about it. Notice he is saying that it is HIS money. As if each of us has a certain allotment of credit available to us. I believe he is convinced that he is accessing HIS money when he uses a credit card.

He is thinking this is an inheritance or a grant or something. He doesn’t realize that each time he uses the card, he is creating debt. Plastic is debt. When we use these credit cards we are actually borrowing from the issuing bank. We are given a few days to even the score. So often we don’t do that, resulting in the interest gauge kicking onto effect.

It appears to me the credit card issuers are sweet-talkin’ these young people, (with so many wants and not enough sense), into believing this is their money. In one article I ran across a few weeks ago, the average debt owed on credit cards by the typical twenty year old university student is $2,700.

This is the argument for not using the cards at all. Or at least until you learn how to use them. If you are not paying them off every billing cycle, you don’t know how to use them. And remember, you tend to spend around ten to eighteen percent more when you use plastic instead of cash or green backs.

Commit to your memory … plastic represents DEBT. A credit card is instant access to a LOAN (debt).

Borrow only on the things that build assets or help you to build assets, like a home or a vehicle to take you to and from work.

.
Post to del.icio.us   Digg this   Post to Slashdot