The offers can be tempting. Get $1,000 cash now to go on a vacation or catch up on bills. Apply for a line of credit to get a discount and avoid using your hard-earned cash now.
Companies have creative ways of masking debt to make it more appealing for you to fall deeper into a hole. Taking on more debt is only going to hurt you more if you are doing so bad financially that you need $1,000 to catch up on your bills or to afford a vacation.
People make the mistake of treating credit as if it’s free money, so they get suckered by the continual offers of fast cash and promotions to apply for credit to pay for simple transactions. I know because I used to fall for it too before I decided enough is enough and if I want to achieve my financial goals, easy credit will delay me.
Credit over cash?
You have to resist the temptation to accept new credit offers. Recognize that they are tricks to sink you further into debt and farther away from your financial goals.
How will you ever achieve financial security if you are constantly choosing credit over cash? That credit comes at a cost, daily interest accruing on your balance to make creditors richer and you poorer.
So not only do you have to pay back the amount of what you charged, but you have to pay back the interest, which could be an additional 13% interest on a credit card and more than 100% interest on a payday loan, and if you carryover the balance because you can’t afford to pay it all off, you continue to pay even more interest.
Meanwhile, what do you think this is doing to your savings goals? Money you could be stashing into savings and investment accounts for an emergency fund and retirement is fattening the coffers of multi-million dollar creditors.
So delay your instant gratification to avoid long-term debt stress. Exhibit willpower and just say, “no” to credit offers unless you are financially stable, meaning caught up on your bills, and you have ample savings, at least six months of living expenses. When you are financially stable with plenty of cash stashed, you are in position to sometimes take advantage of the various points, discounts and rewards associated with applying for new credit as long as you can easily pay off your balance without any stress.
‘Recognize the games’
However, most people use credit as a way to get out of a hole or to avoid spending their actual cash so they can stretch it to pay for something else, only to suffer the consequences of mounting debt.
So recognize the games creditors play to get your money and decide today to stop playing and start paying cash (or debit) unless you can afford to play in the credit game.
Teneshia LaFaye is a former award-winning newspaper journalist and a nationally certified financial education instructor. She owns a health insurance agency and has written two books, What My Mom Taught Me About Money and Mom’s Money Lessons.