Capital One, We Are Not Friends

The world in which we live in, is full of the buy now pay later mentality, even more so than most people want to believe. There are people who don’t even know that they believe this mentality. There are many companies that want nothing more than to have you believe this and to keep you enslaved to them through debt, because when you are in debt that is exactly what you are, enslaved to it.

There are approximately 641 million credit cards in circulation right now responsible for nearly 1.5 trillion dollars in spending. The scary part about that is there are only 303 million people in the US today. Credit cards are everywhere, and you almost can’t get away from them. All you need is a name to get one and start spending.

“But I pay mine off every month so I don’t ever have to pay the interest.” This may be the case, however you are the minority. In 2004 only 39% of credit card holders paid them off in full every month. Over 50% of Americans hold a balance on their credit card that remains every month. This amount gets interest applied to it, and presto the credit card companies make some good money. Also Cambridge Consumer Credit Index found that 47% of balance holders only make the minimum payment. Minimum payments don’t even touch the principle very much.

“I am using my card to build my credit score” Well that is a kind of catch-22 with that statement. You are implying with that statement that you intend to borrow money in the future. “I need the low interest rates in the future.” That is if you intend to borrow as well. Here is a novel idea for ya. Don’t buy something you don’t have the money for! Having a credit card builds credit true, but it does not build it very well if you just pay it off every month. It is built much faster when you have a balance that remains on it, and you pay at least the minimum on time every month.

“If I don’t build my credit score I will not be able to get a house.” To answer this one I am going to quote Dave Ramsey on this one.

“Since you aren’t “building your credit” you will need to find a mortgage company that does actual underwriting. That means they are professional enough to process the details of your life instead of using only a Beacon score (lending for dummies). You can qualify for a conventional 15-year fixed-rate loan if:
• You have paid your landlord early or on time for two years.
• You have been in the same career field for two years.
• You have a good down payment.
• You have no other credit.
• You are not trying to get too big a loan.”

So if you act your wage, and get a house that is within your means you will be able to get a house. Oh and just in case you are not sure if there are companies that will do this here is a good one that will. http://www.churchillmortgage.com/

I am not saying that credit does not matter or that good credit does not help. That is far from true as it does help and negative credit like unpaid debts and bankruptcy does hurt you, and makes life at times very hard to build. However, if you manage your finances well, and have no debt you will have money to buy things, and build wealth. Debt does not build wealth. A credit card will not make you rich. Having money and investing will make you rich. That is a whole other thing however. There is a whole other way of doing things other than using credit cards and getting loans for things. Budgeting correctly, saving correctly, acting your wage are other parts of the story that one must learn about.

I know I do not exude what I am preaching, and I am working on getting my life in order with this. I have only recently changed my views and ideals on debt and the way I spend money. I am actively working on safely eliminating all of my debt and building the correct savings for a down payment on my house. I do not want to live with debt for the rest of my life, but I want to build wealth and change my family tree.

“Live like no one else right now, so later you can live like no one else.” – Dave Ramsey