I was talked into my first credit card by someone on the phone. I was told that it would help me earn points towards computer games I was buying already, so I thought it a good idea, even though I hardly used the card ever, and I always paid the balance.
My first real encounter with debt was when I graduated from college. I had two debts– a college loan (kinda, it was a balance on a credit card my parents wanted me to pay off) and a loan to the school. I also decided to pick up a third loan– this one in my name– for a car. A 1992 Red and Gray Saturn SC2, power everything, moon roof, pop up lights, the works.
My father told me that it would be good for my credit score to pick up a short loan for the car and that way I’d be on record as able to pay a loan back. We opted for a six month loan for the $6,000 simply because I was making good money, staying at home, and I could make the payments.
There was my first problem. What I was taught here was that debt was a reasonable way to get something that I wanted right now and not have to wait and save. Sure, I made the payments, but the pattern is what was established. I was a slave to the “as long as I can make the payments, I can have what I want when I want it, and that’s fine with me.”
This is what’s at the root of today’s debt problem. We have instant access to thousands of dollars, and we don’t realize just how much money we are throwing away because we refuse to wait.
Waiting does four things:
- It makes you wait on God.
- It combats selfishness– having credit encourages the “I have the power, I can get it now” philosophy.
- It saves you money– just think about how much of each payment actually goes toward principal. Add it up over the lifetime of the loan, and just think how much that interest money could be worth now if you’d been putting it in a savings account (or in a sock under your bed for that matter!)
- It gives you time to evaluate the thing and to watch the price come down– it’s no secret, but time devalues many things. If you wait for that thing to come down in price, the same money that you’ve been saving will buy you a bigger/better flat panel LCD monitor than the one that you’ve been having your eye on.
The first thing that we have to come to grips with is that we should not use credit to buy things– cars, televisions, even houses. But more of that as we keep going.