After teaching a recent seminar on debt reduction strategies, I was approached by a college student who, several years ago, had taken advantage of a pre-approved credit card mailing to sign up for a $20,000 credit limit MasterCard. When I asked him what he did when he received it, he quietly confessed that he had purchased $20,000 worth of audio gear. He was seeking my advice on what he could do to remedy the situation.
Since I unfortunately don’t have a time machine, I couldn’t undo the damage that had occurred. Now I could only help the student chart the slow and painful course to repay the debt that never should have been incurred.
Unfortunately today we are a debt-laden society – as a country, as individuals – we often live beyond our means and, once the die is cast, we spend years repaying the borrowed amount, typically at a high interest rate and over a long period of time. And of course the credit card companies are pleased to facilitate our unnecessary purchases.
The common sense advice? Don’t buy that you can’t afford! Duh!
One of my favorite video clips is of an old Saturday Night Live skit with Steve Martin. It says it all: http://www.hulu.com/watch/1389/saturday-night-live-dont-buy-stuff