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This subject is near and dear to my heart. It is not to bash credit but to shed light on how to use credit to our advantage. As a single mother of 6, beautiful children. Not to live paycheck to paycheck or on credit can be a daily challenge. We live in a world to buy now and pay later is the norm. When in all actuality our 2% nation of "wealthy folks", use and manage credit as an investment tool.
Credit is not bad credit is nice to have when one is able to manage and not let it manage us. "Well what do you mean credit is not bad"? You have a job and no transportation to get to and from work with no extra money to purchase a vehicle. Some may think catch a bus, save up, or hitch a ride from a friend until you can purchase a vehicle. All of this is great and savvy if you can be that disciplined. This type of behavior is learned, it's a process, and known as delayed gratification. Delayed Gratification: describes the process that the subject undergoes when the subject resists the temptation of an immediate reward in preference for a later reward. This my fellow readers is not the norm. We eventually give in and finance the vehicle.
The decision is made to finance a vehicle. This is not a bad thing but we have two options. Contingent on our credit we may take out a loan to get a reliable car or a LUXURY CAR/SUV/TRUCK with a LARGE payment. We know we can’t afford the more expensive vehicle and it causes us to live outside of our means. When we leverage our credit, and stay within our means... We not only pay back money borrow then in return we get more credit which allows us to buy bigger and better things. If we buy a BMW and pay $1000 per month and our income is only $2,000 per month. Sooner or later we will have to substitute something like food, clothes, or even shelter to continue to pay the high car payments. Yes, we lose our shelter too!
Today foreclosure and bankruptcy is on an up rise and happens to us often across America. On the other hand, when we listen to our instincts and get the Honda for only $200 per month not only will we stay within our means, but we build credit. As our income increases we save up, store up, invest up, and get the money in the bank to put a large down payment up front and buy the BMW or in my case a Yukon Denali I waited on for years.
I guess if I can wrap things up please leverage and manage credit to make your life better. Listen and trust your instincts don't buy what you can’t afford.
Nuggets from a journey of debt to debt freedom!
Debt Diva