Get a credit card to establish credit – What were we thinking?
Debt Crunch Going into debt to establish credit – what are we teaching our children? I know. I know. I’m just as guilty as the next guy. I listened to a twenty something during a break at a work training – she was explaining how to needed a co-signer for her car loan even though she paid on her credit cards each month on time. “I got the credit cards to establish credit” yet she was talking about how she didn’t have enough credit line on her cards to put a new stereo in her car.
Hello!
First of all, was there really a time I believed that credit cards was THE way to establish credit? Okay – yes… I’ve even had a car loan that I thought would help me “repair” my bad credit then it turned out to not help me one iota. Other that personal finance blogs online – I rarely hear people talking about their “car fund” or “house fund.” I don’t get the feeling people around are saving for their dreams. Instead, they use creative financing to get what they want in life.
One of the most dangerous ways to fund dreams is with credit cards. Long after the clothes we put on a credit card no longer fit because we gained weight eating out courtesy of citibank – we owe more and more. Then when we want to buy a house – we are told to clear up our debt before being considered for a reasonable interest rate on a mortage.
The misinformed twenty something I mentioned earlier wanted more car than she could afford with sound systems outside her budget and credit cards that are NOT helping her establish credit. Instead, she owes and pays without making any headway.
Like me – someday she will realize she owes $3,000 on a Sears charge card for a washer and television that have long been on the dump. It would have been easier to go to the laundrymat until I had saved up $350 for the washer and cheaper to save up a couple hundred (in 1995 televisions weren’t $100 for a 19 inch) dollars to get a new television.
Fast forward to 2007 – it’s just one big chunk of debt that hangs over and keeps a person feeling hopeless about things ever getting better. Just how much harder is it to save then spend than it is to go into debt over and over. It is really the easy way? It’s faster yes to use a credit card or take out a loan. You get what you want when you want it – that is the ONLY plus side. Everything else is a burden.
Tammy – Debt Crunch
Tags: cosign, credit, credit card, debt, debt-crunch, establish credit, Goals, loans, mortgage, personal finance, saving
