3 • What is the difference
between Money and Credit?
People unconsciously regard credit as equal to cash, simply because they are both tools of trading that facilitate the purchase of things, but that's where this equality ends. As result most people have a very ambiguous perception of the difference between using these two vastly different trading tools. What is worse, just because creditors are in the business of renting money, we have all been lulled into complacency by credit marketers to believe credit is like cash! They advertise easy credit by showing toys and good times we can buy to play on our desire for things to increase the renting of money. They sell you on the idea that with credit you can have everything you want, fun, toys, holidays etc, today, and pay later. They want you to believe your credit, is money, to get you to use rental money to buy everything, every day. In this, they have sold us all into the "buy now pay later" debt slavery. Using your own money costs you nothing, but using other people's money is more costly than you realize.
People spend 12-18% more when using credit cards instead of cash and the average household carries $15,593 in debt. Depending on your credit rating credit card interest can range from 15 to 29%. So what does this interest really cost, if you are using credit cards to float ongoing loans? This means that for every $100 you spend on credit you can be giving up to $30 to somebody who does nothing but take your money. Families who keep their debt on their credit cards can know that every $100 of debt will cost you $235 after three years, after 5 years it's costing you $420, and after 10 years that $100 dollars of debt has cost you $1700 extra dollars! What does that $15,593 cost the average family to carry? It's just not worth using other people's money!
How can anyone get the most out of life if they are paying 30% of their income just to make purchases, now? Over 30% of people are struggling under the burden of overwhelming debt just because they did not learn to manage their money and save. The really sad part is that while paying high interest to float rented money 60% of families have, to some degree, limited their quality of life experience to making ends meet, and as result, are at risk because they have saved no emergency funds!
While they want you to think credit is your money, why do you think they call it credit? Credit is what you give someone who has done a good deed so what has that got to do with finances? They want you to think credit is good for you and have hidden the fact that this is not money, it is DEBT! Nobody likes the idea of debt, so they changed its name to credit, just to make you forget this is really debt that will cost you your financial freedom. As result, you need to be smarter than they expect and only treat your credit card like it's the very cash you already have in the bank; spend only what you can pay for in the month! This is the only way to stay out of debt prison. Some people treat their credit cards like unlimited spending resources, running up balances they know they can't pay off and only making the minimum monthly payment. If you're going to do this, be prepared to spend significant amounts of all your income on interest payments and most of your life working just to meet the worry of paying for rented money.
When you Understand Credit, You will have Great Credit!