PEOPLE SHOULD BE BLAMED FOR LIVING ON CREDIT!

Most western countries operate a “credit system,” where a credit card is used to shop for anything from groceries to automobiles. Most people practically fund their whole (expensive) lifestyle with their credit cards, thus leading to the mess that the world has found itself in (again!) known as “credit crunch”.

“A credit crunch also known as credit squeeze or credit crisis is a reduction in the general availability of loans or credit”

People need to learn to live within their means and should only purchase assets that will appreciate over time with their credit facility. If you cannot afford to buy a house with your present income then do not bother buying a house now. Before you purchase a house, first examine the amount of money you must have saved up as down payment. Then take into consideration your fixed income, which is your monthly or weekly salary/pay check.

Make sure you deduct your fixed expenses such as gas, water, electric power supply bills, taxes etc. Then find out if the remaining balance will be adequate to make mortgage payments. Be sure to keep in mind that you will definitely need emergency cash at all times, because it is better to always be prepared. 

Research has shown most people living in the United States have been terribly affected by the credit crunch, no thanks to living above their means. How can you pay your mortgage with your credit card? Everybody knows that short-term debt is the most expensive debt to clear and to employ short-term debt to pay for a long-term venture is not a wise thing to do.

Many people actually purchase houses and automobiles when they know that their source(s) of income is erratic. When they are no longer able to keep up with the payments of mortgage and car lease, the bank swoops in and forecloses on their houses. Therefore, before you can say, “Bob’s your uncle”, they end up on the streets with no house and no car all because they have chosen to live high above their means.

How can young people avoid becoming victims of the credit crunch? Here are two examples of how young people can avoid becoming victims of bad credit:-

Be disciplined – you do not need to buy everything you set your eyes on in the mall or store! Women are often the guilty party when it comes to binge shopping. Learn to say no, because let us face it, many people end up not using most of the things they buy on impulse. If you do not absolutely need it, then do not buy it, period.

Save for it – if you are interested in buying something you need but you can’t afford to buy it yet, then save towards it or talk to your boss about giving you a raise. Remember this, your credit card was issued to you so that you can “borrow” and pay back with “interest,” borrowing should not be your first option.

It is living on credit and not being able to pay back loans that has put the world in the mess it is today