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Ten Lies That Put You Into Credit Card Debt (and keep you there!).

If you’ve read our website, www.fortifi.co.nz, you know the astonishing truth that the average person in New Zealand spends $1.17 for every dollar they earn. How can that happen? It is because of the way we use our plastic cards.

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  10 Lies That Put You in Credit Card Debt (and Keep You There!)

credit_cards.jpgIt’s so easy to buy something on credit without giving any thought to how we’ll pay it off and, once we’re struggling with credit card repayments, it’s very difficult to escape.That’s why we often use this newsletter to issue a warning – be careful with how you use that card!  Here's a list of credit card lies that has been floating around the internet in various forms for some time and is a timely reminder to think before we zap that card.
1. It’s an emergency
Define emergency! Many people have an emergency fund but don’t define what constitutes an emergency. Not having a pair of shoes to go with the clothes we purchased yesterday is not really an emergency!
Give some thought ahead of time – what is a REAL emergency and what is your contingency should such a situation arise.
2. We deserve it
spending_1.jpgMany people do well with their savings for a while only to one day go out and binge spend. The reality is, we all need to spend something on treats sometime.
A way to stop this spending leading to debt is to set aside a little money each week for “pocket-money” or an entertainment allowance. Take this money out of the bank in cash each week and when you feel like a treat spend that amount and no more.
3. It’s a bargain
When we find a deal the question we need to ask is “do I really need this?” If the answer is “no,” then it’s not a bargain no matter how much we’re saving.
4. It’s not that much money
We often think a few dollars don’t matter. There are two problems with that. Frist, all those few dollars can add up to a lot of dollars. Second, it’s not just the item cost that we need to repay. Once that small amount goes on our credit card we are paying compound interest on it and all the other purchases we’ve made.
5. The card rewards make it worth it
Reward cards can be a good deal – but only when we pay off the entire card balance every month. If we are carrying credit card debt and thinking, “Oh well, at least I am getting reward points,” we are losing money.
6. Interest free terms
Almost everyone who buys something on interest free terms does so with the intention of paying the full price off within the interest-free period. The finance companies have to make money somewhere, and they do, because most people do NOT pay off the balance within that period. And once the interest payments click in it can be very difficult to get rid of that debt.
Click here to read the article on our website about interest free loans.
DT_Filing.jpg7. It’s for my business
Credit cards can be a valuable tool for business and personal purchases. However, the challenge to show restraint in our personal finances applies to our business finances also.
8. I’ll pay it off after graduation
In this day of Student Loans this is becoming a big issue amongst new graduates. During their student days they have become used to thinking, “I can add to my credit card debt because I’ll graduate soon and have a job soon and when I do I’ll pay off my debt very quick.”
The problem with that is that even with a regular income it is very difficult to pay off debt that has compounding interest attached. The same rule applies here as it does for everyone else – the best way to avoid debt is to not overspend in the first place.
9. I’ll start paying down my debt… next month
It’s easy to make the decision to change, but the hard part is following through. If you know you have a problem and need to stop, do it NOW! Don’t put it off until next month, or it will keep getting put off.
10. Things would be different if I earned more – and one day I will.
A mistake we can all make is to assume that as we earn more, we’ll pay off our debt and have fewer problems with money. In reality, that’s not what happens.
Most people who have an increase in earnings simply add to their lifestyle expenses. If you want to pay off debt you need to have a plan and the intention to implement it and stick to it.

A final word.
I know credit card debt is often mentioned in these newsletters but it cannot be stressed enough - AVOID DEBT!!
It is so tempting to buy things on credit but for most people it leads to financial issues later on.

We can help you escape debt and find financial freedom.
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