The Plastic Generation
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This is guest post from Debt Lead, who has a debt consolidation website by Kimberly Credit Counseling.
If you even know what plastic generation refers to, you are likely part of the generation that I want to discuss about. This generation is between 20-30 years old that pay for everything with a plastic card and think the space in the wallet is for receipts, not cash.
This behavior can be a quick way to financial disaster. Some signs include:
- being broke
- having a credit card balance unpaid each month
If you have more than 4 credit or debit cards that you use on a weekly basis, then you should step back and take a look at your financial situation that you may be in.
Advertising companies have done a great job at getting many people to forget how hard it is to earn money. They work on our need for gratification. It all starts like this: buy on credit with nothing down, don’t pay for 6 months, instant approval etc. Many of us think what a great deal this is and that they will just save up the money to pay for this in a few months.
Unfortunately, the advertising people have thought of this also and between now and the next 6 months they will have another great deal for you to spend your credit money on. Once you get behind on payments and feel depressed, what’s better than the latest thing to cheer you up? Eventually, the mill of debt grows more debt and you now really work for the credit card companies.
Here’s an idea to assist you. Pay for everything in cash!
Until you have zero credit card debts on a monthly basis I encourage you to pay for everything in cash. You will learn what the term cash flow really means and you will be on your way to learning a critical skill in becoming wealthy. If you want something, save up the cash to buy it and feel the true pride of ownership. Otherwise, you can look at the stuff you bought on credit and see the anchors of debt dragging you down.
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For those who don’t want to carry around cash, use your Visa Check card. It comes right out of your checking account.
In addition, some institutions are even paying rewards on these cards. We just signed up with a credit union in our area that does. It isn’t a lot, but it is something.
I’ve always been a Cash Only person until recently I was finally convinced to get a debit card attached to my checking account… I’m still scared to death of it, (losing it - but it’s attached to an account that only keeps $1000 or less in it). I’m getting used to it, but still like cash for the everyday things. It’s nice for out of town big buying trips tho, like Costco and Bimart, when I used to carry a lot of cash for the day.
My 2 exceptions to always pay cash: 1. a house… but make sure you can pay it off in under 10 years was my personal deal, even with a 30 yr mortgage. That way I knew I would not buy more house than I could afford. The last house I paid cash for tho. 2. A new car - a 2 year payoff on that for me - even with a 5.5 yr payment schedule. Those are just my personal rules. My truck was bought used, and therefore, I paid cash.
Good blog and good advice!
And Happy 4th of July!