Ok, in many of these articles there are explanations on how to manipulate your credit score and interest rates to save and make you money. Here is the very slippery downside to this…its called human error. Also known as lust, gluttony, greed, sloth, wrath, envy, and most of all pride.
Most credit card debt is accrued from individuals living higher on the hog than they really are. There are different motiviations for this, some listed in the previsous sentence. Credit cards give people access to living high on the hog without neccesarily havin ghte means to do so. Basically what I am saying is, with great credit comes great responsibility.
So here is an example of the credit card backfire. You make $2,500 a month, rent is $1000, giving you $1,500 to spend. If you have been paying attention to Greenbackway.com, so your credit score is really good and have a lot of access to credit, lets say $25,000 to be modest.
You see the rumba and think that you can’t live without it and buy it. You go out to dinner with your friends and buy two rounds of drinks for everyone because you want to look cool. You buy nice steak and salmon at the grocery store a couple times a month. The new video game or dress or makeup comes out and you have to have it because you wanted it for so long. You go to starbucks and spend $5 on a drink a couple times a week. You eat out for lunch everyday because you rather sleep in than pack a lunch.
All of a sudden you look at your credit card and realized that you spent $1,600 this month. What do you think? “Oh no I went over in my spending and now I am paying 20% interest on the $100 balance and I need to pay it off,” or “ its only $100 and look at all the cool stuff I got, I’ll put off paying it.”
If you over spend more the next month, and now you are paying 20% on $200. What if it turns into a life style and eventually you max out a credit card. 20% on $10,000 is $2000. That means almost a whole months salary is spent on interest alone. It’s a vicious cycle because not only is it hard to get out from under debt because of the high interest rates, but you have also put yourself into a mental cycle where you will keep spending because buying stuff is better than paying for it.
This is obvious, yet why does the average American household carry $15,000 in credit card debt alone?
This is a question everyone has to answer because the answer is different for everyone. Maybe it’s a medical bill, maybe the car needs new tires, maybe it’s a DUI. Whatever the casue is, the slippery slope is when you try to maintain your standard of living, even though you don’t really have it any more.
Humans don’t like to hear the word no, especially coming from themselves. This is how Credit cards can backfire.
