|
Cut all your credit-cards in half
Monday, 5 June 2006
I've never owned a credit-card. Most people are pretty surprised when I tell them that. They look at me like I've just said I've never had a glass of Coke or made a phone-call.
According to CardWeb, a service that tracks credit card statistics, the average American owed about $8000 to credit-card companies in 2001. Of course, that's spread over a lot of different people. Some don't owe anything and some owe lots. What's obvious though, is that many people fall into the latter category.
Personally, I've never seen any reason to own a credit-card. To tell the truth, I can see no good reason why anybody should own one.
Using credit-card debt to pay for things you can't afford is a little like using heroin to make you feel better. It's pretty much guaranteed to have a negative effect on your life.
Banks and finance companies love giving out credit-cards. The default rates on them are pretty low and the interest rates are really juicy. Why do you think you get so many offers for them? Because they're very profitable, that's why.
But ignore the siren-songs of those companies and follow this simple rule for any consumer goods you want - if you can't pay cash, don't buy it.
Many people hear this rule and think: "But if I don't have a credit card, I can't buy as much stuff".
In fact, the opposite is true. If you pay cash for everything, you can buy more stuff. The money you would have spent paying the interest on your credit-card can be spent on shoes, holidays, cars, or anything else that takes your fancy.
If you're a spendaholic, being without a credit-card makes you better off. You can spend more! It's simple really.
Some people get pulled in by the status of having a fancy credit card. They like the feeling of superiority they get by taking out a platinum piece of plastic in front of their friends. They think it says they're part of the elite.
Not to me. A platinum card just makes me think someone's an elite sucker. And I'm sure many others feel the same way.
Many people get tempted by the frequent-flier points and gift programs companies attach to their credit-cards, but they shouldn't. These are the equivalent of a casino giving out free drinks. The only reason they're offering "free" stuff is because they know, from vast experience, that they're likely to make back far more in interest than they'll have to pay out.
Of course, some people manage to pay off their credit-cards and get the points. Lucky them. You can bet those people are in the minority though or the finance companies would cut their frequent-flier programs quick-smart.
For most people, trying to walk the tightrope of getting points and avoiding the debt probably isn't worth it. Having credit in such easy reach is just too tempting. It's a little like looking at people who can smoke the occasional cigarette without becoming addicted. There's no guarantee your willpower will be as strong.
Don't make the mistake of being over-confident.
Of course, just to operate in today's world, you need a credit-card number and expiry date of some kind. Without one, you can forget about buying most stuff on the internet or renting a car. But there's an easy solution to this problem which is available in most countries.
It's called a debit-card.
I've had one of these little babies myself for the past twelve years. For those who don't know, they're basically a credit-card that's linked to your savings account. When you buy something with it, the money's taken directly out of your savings. If you've got no money, you can't use it.
So reach into your wallet or purse right now, pull out any credit-cards you've got, and hack them to pieces with a pair of scissors. There's really no reason to have one at all.
Then start looking around for a debit-card instead. Your finances will thank you for it.
Oh yeah, and you'll be able to buy more stuff!
 | A good strategy for learning difficult subjects | | Some things are just difficult to study. They contain complicated facts that are confusing to the uninitiated. Having to learn such things can be a very frustrating experience! What's the best strategy to cope? |  | Don't buy into the "no fear" bulldust | | Okay, stand back and hold your breath. I'm about to question one of the quasi-religious commandments of personal development. It's the one that says fear is all bad and should be overcome. That the aim of life should be to "live without fear", usually followed by some blather about love being the opposite of fear. |  | Be generous to the future | | The future is like a giant spiritual bank account. You can invest in it, or withdraw from it any time you like. How you treat this bank account plays a big part in deciding how successful you are. | | It's hard to appreciate the emotional impact of something until you experience it | | When I was a young adult, the father of a friend of mine passed away. My friend had a very close relationship with his father, and was devastated. He went into a deep depression for a number of months. |  | Perfect contentment leads to stagnation | | Have a look at how so many of us live our lives. We get up in the morning, go out all day and work, work, work. Whether in a rich country or a poor one, a good neighbourhood or bad, you can be sure that most of the people around you will be working most of the time. | | Don't reward bad behavior in yourself and others | | Almost everyone has done things in life that they knew at the time were wrong. But sometimes, there seems to be an overwhelming force pushing towards what we know is going to be a bad outcome. Why can't we control ourselves? | | Recognise the two universes you live in | | One of my favourite works of fiction is His Dark Materials trilogy by Phillip Pullman. It's about parallel universes that exist, similar to our own but all different. The main characters find doors between these universes and go off on great adventures. | | Find something to live for | | I've just finished reading Viktor Frankl's “Man’s Search for Meaning”, which I think is a very interesting book. Frankl is a neurologist and psychiatrist who has developed a theory called Logotherapy. | | Beef up your mental toolkit | | We are all born with certain reasoning tools which are popularly referred to as "common sense". We know that it's a good idea to avoid pain, for example. | | Accumulate lots of small victories | | When I was at school, a teacher told me an interesting fact. Well, when I say fact, I'm not sure if it was really true. It's more of an interesting allegory. He said that the ancient Romans used to build all their roads in a zig-zag pattern rather than a straight line. |
New articles are being added all the time, so make sure you bookmark Paul's Tips and come back.
|
|