Credit Card RuinPosted on June 4th, 2012 under Wealth of Advice
By Francisco J. Colayco
Once upon a time, having a credit card could give you bring your dreams to reality earlier. That was when credit cards were issued only to people who could really to afford to pay for their purchases and marketing efforts were limited.
I emphasize that the proper use of credit cards can really help you in the management of your personal funds. Unfortunately, the proper use requires real discipline and organization. It requires that you keep proper recording of each usage and storage of each proof of use. Someone could use your credit card without your knowledge and credit card companies can make mistakes. Without a system, you cannot keep proper track of your activities.
The credit card can also bring you special benefits like free meals and free items through the point system. Again, organization will give you the proper information to avail of these benefits.
For emergencies, credit cards can literally save your life. But unfortunately, credit cards, not used properly, can lead to your personal financial ruin.
What changed through the years? Credit cards are now issued to almost anybody with a job. For those without jobs, a financially capable guarantor will open up a credit card application. Those who already have credit cards will find it easier to get more credit cards. Applications are handed out everywhere. The more credit cards you have, the greater the temptation to buy without much thought to the payment. If you do not really have sufficient income, don’t even apply for a credit card. You are just tempting yourself.
In addition, the more credit cards, the more difficult to keep track of paying on time. Late payment results in penalties and interest charges. Even my wife and I have been guilty of forgetting especially when we traveled and moved house. It is not an easy to accept penalties and interest charges especially when you feel you don’t deserve it but it happens so lessen your number of cards.
There is so much more marketing efforts for all consumer goods. You don’t even have to leave home to buy most products. Everything is available through the internet if you have a credit card. The temptation to buy even what you don’t need becomes greater.
If you really want and can afford a credit card, you need to be fully educated and informed on the billing and payment system of credit cards. Study your first bill carefully. Some card statements highlight the minimum amount you can pay and before you know it, you are already being charged interest charges because you only paid the minimum even if you could pay the entire amount. Although credit card company agents are available over the telephone, the automatic telephone system delays communication. But it is still worthwhile to call and understand their system.
WHAT WILL MY CHILDREN INHERIT?
Parents always want to leave a legacy to their children. The legacy is usually money or property that the parents have saved for over their lifetime. There are even many parents who sacrifice too much to be able to leave money and property to their children. Some scrimp and save only to find out that they have spoiled their children to enjoy the good things in life that they themselves have never enjoyed.
A joke that goes around my senior friends is that if you do not enjoy your hard-earned money, it may not even be your children who will enjoy it but your in-laws. That would really be cruel but it happens so many times if you end up with in-laws who do not have good values. Unfortunately, you have very little control over that.
On the other hand, we do not want to be a burden to our children in our old age. We want to have enough to be able to live comfortably to our last days without needing monetary help from them. We believe that sometimes, having too much money might prolong a miserable sick life unnecessarily. Finding the right balance is what we should always look and pray for.
On the bad side, some steal to be able to amass riches that they can give to their children. That is teaching wrong values and that will haunt your children and your grandchildren throughout their lives.
Of course, the more important legacies are a good name and reputation, good values and good education. Giving your children money and properties without teaching them good values and the proper education is just tempting them to be lazy. As the saying goes: “Teach a man how to fish instead of giving him fish.” With proper encouragement, your kids will feel stronger self-worth if they are able to succeed on their own. In such a case, you really would not need to leave them any money and you can then instead donate your remaining wealth for the betterment of your chosen community.
I have, time and again, stated to our children that we intend to enjoy whatever money we have and that they should start early to prepare for their own future. After all, that is what happened to us. Practically everything we have came from our own effort and whatever we received from our parents really did not count in any of our computation.
Our parents were reputable, educated and gave us a good name, good values and sent us to the best schools they could afford.
If you agree with our kind of thinking, then start preparing early for your retirement if you have not done so.
We discuss these issues in our seminars/workshops where we teach you to invest. Choose one to join and you will be surprised on how much you will learn. Call us at 6373731 or 6373741 or visit www.colaycofoundation.com