by Christine Conte

Created on: April 25, 2007   Last Updated: May 17, 2007

Cash or Credit?

There once was a time when people saved their pennies to buy the things they wanted. People knew the difference between "want" and "need"; people could easily distinguish between necessity and luxury. Such a quaint, old-fashioned idea couldn't possibly have any place in our modern debtors' culture!

Today, we are drowning in an ocean of advertising, suffocating in an atmosphere of materialistic consumerism. We are encouraged to go dangerously into debt to obtain the latest trendy thing. We feel pressured to live an affluent lifestyle... but without the actual affluence to support it!

Credit cards are generally considered "bad debt" (as opposed to "good debt", such as mortgages and education loans), especially when used to purchase things we don't need and otherwise could not afford. The worst mistake people make is in viewing their credit line as a source of income, as free money.

Credit cards are truly necessary in only a few cases, such as when reserving a hotel room and rental car when traveling, and for major purchases that are absolutely necessary. All else should ideally paid for with cash.

Comedian George Carlin said it so well (edited slightly to meet Helium standards):

"People who pay for inexpensive items with a credit card.... Folks, take my word for this, Raisinetts is NOT a major purchase. Get some cash together. No one should be paying the bank eighteen percent interest on Tic-Tacs. Next guy in front of me that pays for Newsweek with a credit card is getting stabbed in the eyes!"

Being especially frugal-minded (made necessary by my own stupid money mistakes in the past), I live on a purely cash basis. Whatever "it" is, if I can't afford to buy it with cash today, then I either go without it, or save my money until I can buy it. Many times, this built-in "cool-off" period eventually proves that my original want/impulse was foolish and unnecessary.

Does that latest trendy style make you feel self-conscious of your suddenly unfashionable look? No problem. Just charge it, and then make the minimum payment when the bill comes. Even if you somehow manage to avoid filing bankruptcy, you'll still be paying for that pair of shoes 15 years from now.

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