The Plastic Prison

Plastic Credit Cards are amazing creatures.  These cards can be used to purchase those items your very own parents saved for years to obtain.  Silly old parents, you could have had that 80” plasma HD 1080i LCD television today instead of 5 years from now.  Credit cards are truly an ingenious item.  Did you know that you can also use the card to scrape the ice from your windshield?  Yes, it is a multi-use tool.  OK, enough with the fantasy stuff.  Used properly (ie:  paid in full every month, every time) credit cards can be a tool of sorts; however, miss that first “in full” payment and the credit card is no longer a tool, it is now a plastic prison.

Credit cards by themselves are not inherently evil.  They have no emotions.  They can not physically cause any harm or pain.  Add a credit limit to that 4” x 3” plastic wonder and it can become a sword that is used against you.  We do not need credit cards to live.  That is a basic tenet of life.  My parents are living proof of this fact.  My Dad passed away six years ago this past month.  He lived to be 78 years old.  How many multi-colored pieces of plastic did he own in his lifetime?  Nada.  Zippo.  Zero.  My Dad used cash (fast becoming a foreign item) for everything.  What if he did not have enough cash to cover the purchase price of an item?  He would save for a bit longer and then go to the store, negotiate the price of the item and then pay cash for it.  It would not be beyond my Father to go to the grocery store, load a buggy full of food, go to the register, have it rung up and then request the manager’s presence.  He would literally leave the store with $100 worth of food for $80.  Yes, he was a good negotiator.  Over the years, I literally saw him do the same thing over and over, but sadly was never taught the art of it. 

Look around you, marketing is used in everything.  When I was seven years old, I remember families purchasing Coca-Cola in a 32 ounce glass bottle.  Typically, 1-2 bottles would supply a family of FOUR for well over a week.  Now, it is not unusual for a person to consume 100 ounces in a day; all a product of marketing.  Never mind the typical daily sugar intake is 20x higher per day now than back then and we wonder why obesity is reaching such heights?  Many people today blame obesity on genetics…..give it time, debt and credit overuse will soon be blamed on genetics as well rather than personal responsibility.  The marketing of credit and credit cards is currently at a fevered pitch, at the same time that credit delinquencies are at an all time high.  Go figure.  The marketing is everywhere and realizing that you are being marketed to is the first step to recovery.  Credit cards can now be personalized with your own family photos, how sweet.  Catch phrases can literally stick to you:  “What’s in Your Wallet?” (preferably cash), “Don’t leave home without it”, and “Everywhere you go” just to name a few.  Newer commercials portraying cash purchasers as slowing down the process to fun are especially hard hitting (and often ignored).  You can not even watch a sports show on television without seeing a Visa logo super imposed on the field.  You are being marketed to death and probably do not even realize it.  As a society, we have stopped paying attention and to a certain extent, stopped caring.  We are literally becoming numb to an ever growing problem.  We want stuff, we want more of it than ever before and we want it NOW.  In 78 years, my Dad never financed a car.  My wife and I have financed 10 vehicles in 17 years.  Madness.  Plastic gives you the ability to obtain what you want, as long as you are willing to pay the price.  Bad thing is, most people do not realize the true cost of credit.  Would you be willing to pay $48 for a $16 CD?  No?  Not just no, but Hell No?  That is what I thought.  Charge a CD and make the minimum payments…..let me know when you get it paid off.  If you were going to pay $48, why not save for just a little bit and pay $16 instead?  Knowing that you would not be willing to pay $48 for something that has a sticker price of $16, then why do we do it everyday?  Why do we constantly over charge our credit limits?  The answer is simple.  There is no pain felt when we charge an item. 

Pain is an enormous motivator.  Pain can make you run, make you hide, make you angry, make you fight, make you cry.  Pain can also make you think.  It can make you think before you make that large purchase.  Not many people like pain.  Credit card companies have developed an anti-dote for painful purchases:  plastic.  One swipe, one signature, no pain and the item is yours.  Deceptive marketing practices such as low APR’s, no interest on transfers, etc can quickly become nightmares, simply miss two payments and see what happens.  Credit cards give you ownership.  Owning stuff, for many people, is a measuring stick for how they measure up to their peers.  It has taken me 39 years to figure out the total non-importance of measuring up.  Will your family love you less if you do not acquire that hot, new Christmas toy?  Honestly, love you less?  If they do, consider finding a new family.  As the head of your household, whether you are a man or woman makes no difference, take charge of your life.  If you can afford to charge something and pay it in full when the bill arrives, then congratulations!  If you can not afford to purchase the item with cash, simply ask yourself:

Is this a necessity or a nice-ity?  Will my life be altered without this item?  If no, then stop and then start saving your money.  If the answer is yes, then ask yourself what you have to do to pay for this item in full within the next 30 days?  Develop a plan and then work the plan.

In any case, whether you purchase with cash or on short term credit (30 days!), the item must be paid for before other large purchases are made.  Trust me, any other plan will fail.  Do not make a purchase in anticipation of a coming raise/bonus/income tax return, wait for the money to come first.  Unless you are getting a GREAT deal (greater than 70% off retail), then wait until the cash is in your hand.  You will be amazed at how much you will think purchases through when paying with cash.  Paying with cash hurts because you can see the money physically changing hands.  Once it leaves your hand, it is gone.  Smarter purchases can be made with cash because cash gives you something that plastic can not:  leverage.  Try negotiating with plastic, won’t happen.  Like I have said before, plastic is not inherently evil; however, when abused plastic can become a prison.  The good news is that you do not have to be sentenced for life, credit cards are a choice, not a necessity.