In the end, you will be just what you want to be. Justin Hayward

Spending Wisely

                  

Why Stay Out of Debt?

People that have never had the experience of being in debt may ask, “Why Stay out of Debt?”  When you have never been in debt, it is so easy to lay the plastic on the counter and spend beyond your means and suffer the consequences when it comes time to pay. Before you even realize it, you may have backed yourself in a “financial corner” with few alternatives to conquer your debt problem.

College students may be especially vulnerable to this potential problem because they are in a time of their lives where money is scarce and buying temptations are many. It is compounded by the glistening promises banks and credit card companies offer to the sometimes naïve newcomers to the financial world.

Before you place yourself in debt, think about these important benefits for paying as you go!

1. Power. Everybody wants power these days. The good power is the power to control yourself and your appetites. When you control your spending, you are truly in control of yourself. and have the freedom to have the cash to buy when you truly need and want something that is within your means.

2. Freedom. Everybody wants freedom these days to go and do the things they want to do.  If you stay out of debt and live within your budget, you have all the freedom to capture the buys that are truly wise decisions.  Especially, in this time of recession, people who have managed their money wisely are taking advantage of the many preent opportunities out there.  The ones with the liquidity are buying up real estate and other investments for unbelievably low prices and setting themselves up for big profits in the future because of their smart money management.

3. No Stress.  Everything is happy and everybody loves you when you are spending money.  When reality strikes and you do not have the money to pay your bills, then the party is over.  It is best to understand there is great stress associated with being in debt. The interest charges never rest or sleep!

4. Don’t get taken advantage of. Everyone is concerned about being taken advantage of in this world, yet they will charge items on their credit card at 18% interest and higher.  When an investor lends money at 18% interest, he will DOUBLE his money in three years! If you think about that every time you charge something, you will think twice and ask yourself, “am I being a fool?” It is easy to realize why credit is extended so easily and why they give you 15% discount on your purchase if you put it on your credit card.

5.  Things can change quickly. Many things can change in a month. You may have great intentions of paying the credit card off at the end of the month, but it seems too many times, something happens.  That is what the credit card company is banking on. That is why they offer all the good deals.  They are waiting for a “slip up” and then their interest charges can start ticking.

A lot of people consider themselves quite informed, business oriented, and savvy about life management in general.  It is the “instant satisfaction” urge that can get the best of any of us.  Think about bigger (over $100) purchases overnight! Yes, as you know, if you make ten $100 purchases on credit, you then owe $1,000! You will be surprised what ideas come to your mind as your ponder the decision.  You think of considerations that didn’t even enter your mind when you were on the spot trying to make a buying decision. This technique is a great buffer of protection.

It’s all in the way that you look at it.  If you see your friends with more than you have and it is difficult to pay as you go, think about all the new things you will have and how the satisfaction will be spread out over time, as you save.  By that time, your friends “things” may be worn out and boring and they can no longer buy anymore because they are drowning in debt.

With the pay as you go philosophy, you can wake up each morning to a new day at peace with yourself and with the world. You will come to realize that all the freedom comes from making wise financial decisions throughout your life. Good luck, smile and feel great as you walk away from each buying decision you can’t pay for at the time! 

Betty Gustin  

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