Debt and More Debt

American credit card debt is a leach on personal finance management. It sucks people dry of money. Sure there are “gifts” or “bonuses” that come with certain credit cards for everyday expense. For example some cards give you “free” nights at hotels or “free” airline mileage, but remember there is no such thing as a free stay at a hotel or free airplane ticket. Everything has a price.

Credit Card

Credit Card (Photo credit: 401(K) 2013)

Some people go into debt to get these points, other go in to debt because they want to have the latest gadget on the market. Some want to live a lifestyle that is not supported by their income. In other words they are spending tomorrow’s money today. This is how people go into debt. They spend more money than they can pay back by the end of the month. Now you have to pay an interest on the unpayed money. On the average the current credit card interest rate is 15% which is really high. In the long run you pay more money then the item really costs.  Today the total credit card debt in America is $843 billion dollars.

On the other hand mortgage debt and student loan debt are sometimes necessary. You do need a place to live. However some people tend to take out a big mortgage on the expensive house they bought. Now they have to pay a high monthly payment that they can’t afford. If you need to buy a house or go to college, buy a house that is in your budget. The same applies to colleges. The result of spending too much on a house or college is massive debt. Today the total student loans is $1.046 trillion dollars and the total mortgage debt is $12.9 trillion dollars.

There are differences between credit card debt and mortgage and college loan debt. A difference between these three is that credit card interest rates are much higher than mortgage or college loans. The average interest on credit card is 15.35% unlike 4.8-6.8% interest for college loans or 4.30% interest for mortgages loans. One other significant difference is the amount borrowed. People borrow more money for a mortgage loan or college loan compared to credit cards. These are just a few differences.

According to the usdebtclock.org the total American credit card debt is decreasing. More people are learn how to budget and prioritize their money. Try not to go into debt. The take away note is in Proverbs 22:7 b,”the borrower is servant to the lender.” You will never truly be free unless you are debt free.

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One response to “Debt and More Debt

  1. Pingback: Gary North: Free Market, Ron Paul Curriculum Advance and Public Schools Are Doomed | Charleston Voice

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