Wednesday, May 6, 2009

Debt is Dumb

Our credit rating is on a respirator. It's barely holding on for dear life. It's useless, actually. Just lays around all day in a hospital bed under a morphine spell. We don't even visit it anymore. It doesn't recognize us.

Debt did it. Debt killed our credit rating. Our debt. No one else's. Our inability to stay on top of our debt, to be more specific. You know how this goes.

Many months ago we began to prepare ourselves for the death of our credit rating. It's inevitable. We agreed that it would be okay. We never want to be in debt ever again so not being able to use credit is a way to not be in debt, right? We don't need it. Cash will be our king and we'll never use credit again.

This may sound like an extreme over-correction not to mention impossible. Indeed, there are stories about people declaring bankruptcy and a few months later the credit card offers start arriving again. So it's not like we'll never be able to get a credit card again... it's that we don't want to take that chance.

You're supposed to use self-control. You're not supposed to carry a balance. That's when you get into trouble. Yes, yes, we know. But why is this so much easier said than done? We had zero credit card debt before we bought our house. And then... and then... well, mistakes were made. The balance ballooned and the rest is history.

Debt, one could say, is dumb. We're not stupid, so how could we be so dumb?

In "Walking Away from Credit Cards" on CNN.com financial expert, David Ramsey, says this about that:

"Debt is not a tool; it is a method to make banks wealthy, not you," says Ramsey's Web site, where users can find blunt advice on how to deal with creditors and develop sound money habits. "Debt is dumb."

The article then goes on to quote Brad Chaffee, a finance student of Charlotsville, Virgina who thinks:
"I think if we just use cash and debit cards, it's a much better idea," he said. "Credit cards are too risky, and when something does happen to you and you have a bunch of debt -- like for instance when life happens to you, you lose your job or whatever it may be -- you've got all this debt in your life, whereas if you didn't use credit cards and you didn't use debt, then you might be in a little better situation."

We agree.

Walking Away From Credit Cards - CNN.COM

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