Davis then continues on stating that the reason for the spender’s interest in credit cards is because it allows them to “decouple” their transactions. They are more willing to spend because they believe that it will be cheaper overtime due to the smaller payments, rather than just paying everything upfront. This psychologically leads buyers into believing that they can have it all without consequences, when in reality this is a false presumption. Once sucked into this belief, consumers then start to borrow money that the majority cannot afford to pay back on time. When this happens the borrower falls into debt over the years unless they are able to control their spending habits.
Instead, people often figure they can just make minimum payments on their loans and spend the extra on extravagances. When their incomes decrease, they are proved wrong. Among the results of these decisions is foreclosure. Be... ... middle of paper ... ...to be fired before those with the better education. As well as being better trained for their jobs, people with a college education have an easier time switching careers if their place of employment goes under.
They look forward to their next pay raise, or promotion, so they can earn more money, spend it, and subsequently go deeper into debt. Debt could include credit cards, mortgages, car payments, or anything else owed to another party, usually a bank or lending company. People are normally able to continue, at the very least minimum payments on these debts. This allows them to maintain and enjoy these various luxuries, only to find that they need to work and pay for them at a later time. When these people loose their jobs, due to downsizing, or any number of other reasons, they find it impossible to maintain their unpaid for accessories in life with no income.
Solving the foreclosure crisis America is currently facing would be no easy task. It is common knowledge that even our countries greatest minds cannot come up with a solution. However, I think the problem could be solved through better advertising. The public, mainly those who are still employed and pulling in money, could benefit from knowing that houses currently undergoing foreclosure are up for sale for much lower prices than they would usually go for. Those who are still employed, and who plan to be employed throughout the current recession, would more than likely consider upgrading to a bigger home if they knew that right now is the ideal time for them to buy, before there is another peak in marketing.
Another major factor that greater influences other to increase expenses and should be avoided are credit cards. Credit cards can make someone feel like they have a lot of money to spend however all that debt is piling up while you are forgetting to pay. In conclusion always think about how to spend your money rather than how to earn. Be cautions of products and think of how much you want to spend on a specific product always asses what you need and this of how to refrain from impulse buying. Don’t deprive yourself from buying what you love, instead budget yourself and think according.
Not everything that is expensive is better. Rich people can get everything they want, but middle class people need to think if they need it, or they can find the same thing cheaper. Most people try to find cheaper things, but some buy expensive things, because they think that it will help them to feel that they are rich. First, people buy those expensive things, and after that they are in debt. Expensive things need a lot of money, but people don’t have them, so they use credit cards to buy for that.
Most people want to blame the banks and card companies, but in the end the person put themselves in that predicament. The majority of adults are not taught how to manage their money properly and may eventually end up living off of credit as a way to pay for necessities. Therefore, simple planning and budgeting can prevent over spending and knowing what the money is being spent on. In the article Credit card woes may be your own fault, La Times writer Liz W Pullman states, “credit card debt, by definition, is a bad idea. It’s corrosive to your financial health and much too expensive for what you get- essentially the luxury of temporarily living above your means.” In other words, Liz is stating, debt is comprised of trying to live a lifestyle a person is not able to afford.
Debt is among one of the most prominent reasons that using cash is wiser than using credit. Many people will spend money on their credit cards thinking that they will pay it off at the end of the month, but, in reality, that rarely happens. The credit card companies trick their customers into believing they will get rewards, but the interest that has to be paid on credit spending completely overruns the rewards that are promised. “The average family owes $8,000 dollars in ... ... middle of paper ... ...itionally, another advantage of credit is the rewards that some credit card companies offer. Most major companies offer cash back, frequent flier miles, and other rewards programs.
For instance, when making a big purchase, people do not want to be carrying around hundreds of dollars. Throughout the day one might lose some of their money or might spend it on something that they were not intending on buying because it is just readily available. Spending a little extra on a bank to maintain your money will pay out in the long run. When credit card company’s “charge high interest rates if you don’t pay your bill in full by the due date” it can make credit cards a more expensive way to handle your money (Cash Vs. Credit Cards). For big banks, “Some credit cards also carry annual fees just to use them, along with foreign transaction fees, balance transfer fees, and late fees” (Cash Vs. Credit Cards).
People who had borrowed money from others but were too poor to pay them back normally lived a harder life. If debts were forgiven every fifty years, if they were still alive, it would give them a chance to try and live a normal life again. Nowadays, people would not stand for such a principle. Richer people would not agree to it because they would be losing money they had lent to other people. People who had borrowed money, however, would like it because they would not have to work to pay them back.