Spring Break
Eliminating holiday credit-card debt
Jonathan Pearson
Issue date: 1/8/07 Section: Culture
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Credit cards and cocaine have a lot in common.
"Both are readily available and seem cheap at first," said Liz Pulliam Weston of MSN Money. "But both can lead to a spiral of financial devastation and emotional despair."
Where do credit-card users draw the line between need and frivolous spending?
"Unlike cocaine, though, credit is pretty much a necessity in the modern world," she said. "A good credit rating will make it easier for your children to rent their first apartments, land good jobs, get better rates on their insurance coverage and buy homes."
I couldn't agree more.
Credit-card bills befall a nauseating reality at the beginning of the new year. The previous balance of zero now climbs into the hundreds, maybe even thousands.
Let's face it: credit-card debt leads to more headaches than happiness. Starting off your financial history with crappy credit is a dreadful mistake. Take it from an expert spender.
I definitely don't have a Ph.D. in economics, but from my few encounters with credit, both good and bad, I've developed some simple logic. A good rule of thumb: the fewer credit cards you have, the better you can manage your money without feeling trapped on a downward spiral.
Regardless of my credit-card balances after Christmas, the fact I had any credit at all helped me snag a fantastic loft downtown. Since I pay at least the minimum payment on my card each month, my credit score hasn't drastically fallen.
But every time you watch television, there are many commercials asking, "Do you know your credit score?"
Well, it's not a good idea to check it often. If you feel you have a poor credit score, check it once and never check it again. Each time you check your score, it appears as an "inquiry" to the agency and they lower your score. It's an annoying catch-22.
With endless student loans, fewer scholarships and skyrocketing tuition, college students can't afford to make inevitable debt worse. Just because the rich can afford everything, does not mean everyone can.
"Both are readily available and seem cheap at first," said Liz Pulliam Weston of MSN Money. "But both can lead to a spiral of financial devastation and emotional despair."
Where do credit-card users draw the line between need and frivolous spending?
"Unlike cocaine, though, credit is pretty much a necessity in the modern world," she said. "A good credit rating will make it easier for your children to rent their first apartments, land good jobs, get better rates on their insurance coverage and buy homes."
I couldn't agree more.
Credit-card bills befall a nauseating reality at the beginning of the new year. The previous balance of zero now climbs into the hundreds, maybe even thousands.
Let's face it: credit-card debt leads to more headaches than happiness. Starting off your financial history with crappy credit is a dreadful mistake. Take it from an expert spender.
I definitely don't have a Ph.D. in economics, but from my few encounters with credit, both good and bad, I've developed some simple logic. A good rule of thumb: the fewer credit cards you have, the better you can manage your money without feeling trapped on a downward spiral.
Regardless of my credit-card balances after Christmas, the fact I had any credit at all helped me snag a fantastic loft downtown. Since I pay at least the minimum payment on my card each month, my credit score hasn't drastically fallen.
But every time you watch television, there are many commercials asking, "Do you know your credit score?"
Well, it's not a good idea to check it often. If you feel you have a poor credit score, check it once and never check it again. Each time you check your score, it appears as an "inquiry" to the agency and they lower your score. It's an annoying catch-22.
With endless student loans, fewer scholarships and skyrocketing tuition, college students can't afford to make inevitable debt worse. Just because the rich can afford everything, does not mean everyone can.
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