Credit Card Debt Is A Curse

*repost

Credit cards are convenient, but they can also lead to debt that keeps people poor.

What is debt?

Debt is when you owe money to someone else and must repay it. This can happen when you borrow money from a bank or other lender, make purchases using a credit card, or take out a loan. When you have debt, you must repay the loan amount plus interest, which is a fee charged by the bank for the option of borrowing their money. It is important to be cautious when taking on debt because failing to make your payments on time can have huge impacts on you life such as lowering your credit score or even ending in law suits!

The Curse:

To begin with, credit cards make it simple to spend money you don’t have. When you use a credit card, you are simply borrowing money that you must repay with interest. You are borrowing from your future self.  This is ok if you can pay off the bill in full each month, but many people end up carrying a balance from month to month, which means they’re paying interest on top of the original amount spent.

Secondly, credit card interest rates can be expensive. This means that if you only make the minimum payments, a small balance can quickly grow into a large one. For example, if you have a $1,000 balance with an 18% interest rate and only make the minimum payment each month, it might take you over 7 years to pay off the balance, costing you over $700 in interest alone.
If I use a credit card to buy a $1000 iPhone. It would cost me $1700 by the time I pay it off, and it would have taken 7 years to have no debt. I would have likely purchased two or three new iPhones at that stage, and the debt would have never ended.

Third, credit cards make it simple and easy to overspend. When you use cash or a debit card, you can only spend the amount of money that you have in your bank or your pocket. However, with a credit card, you might easily spend more than you can pay, causing debt and financial worry.

Finally, credit card debt can be a never-ending cycle. When you carry a balance, you pay interest on it every month, which means you have less money to pay it off. This can make getting out of debt hard and sometimes makes you feel like it’s not possible to get back to a ZERO balance, and you may find yourself counting on credit cards to fund your bills, which just leads to additional debt.

So, how do I avoid credit card debt? One way is to only use credit cards for items that I know I will be able to pay off in full at the time I press buy. Another option is to try to negotiate a reduced interest rate with your credit card issuer or move your balance to a lower-interest card. Finally, if you’re drowning in credit card debt, it may be useful to seek the help of a financial counselor, advisor or a debt management program.

To summarize, credit card debt can be a big obstacle to having a healthy bank account and can keep people poor. You can take charge of your finances and establish a more secure financial future by being careful of your spending patterns and taking steps to avoid or manage credit card debt.

Personally, I actively avoid credit card debt. I also resist all personal debt, exception when it comes to a house. This allows my family to have much more money from month to month, and rather than paying off my past, which is what paying off debt means, I choose to spend my money on today and the future.

I also do not currently use loans to invest. I’m sure I’ll use leverage with real estate someday, but for now, we have no debt and are glad to keep it that way as we grow our careers and our financial foundation.