Have I ever told you guys how much I love the interaction on blogs? Well I really do because if I was running a typical web site where someone just posts content and that’s it then I would receive very little feedback. Let’s be honest who wants to email someone to make a comment on a post? Having comments available for every post is what makes a blog so much fun. The reason I have started off with this is because a comment made yesterday by Grant Baldwin really got me thinking. Grant made an excellent point when he said ‘”I would agree with you that spending money is a good reward under 2 circumstances: 1) Always pay cash – don’t reward yourself by racking up debt on your credit card…”
This is exactly what today’s post is about. After talking to many students and young people that have racked up insane amounts of debt over the last few years I have come up with the main reason why so many young people are in debt- young people make purchases without having the money to pay for the item.
Before you start yelling at me and calling me captain obvious hear me out for a second. There are certain purchases in life that will almost always guarantee that you will not have enough money (first home or education). I’m not going to debate these purchases today because that is a whole other topic. Few people use their credit cards to simply build their credit rating because as soon as the purchase is made they electronically transfer the funds. Today I want to discuss some of the reasons as to why young people spend money that they do not have.
Convenience. It is so simple to swipe a card that literally anyone could do it. Well actually in the world of automated payments you may only have to swipe your credit card once and then get billed monthly. To make things even easier, when it comes to online shopping all you have to do is type a few numbers in and next thing you know you have a new wardrobe.
Reward. Yes yesterday I wrote about the importance of rewarding yourself but today I want to stress that there is no reward in putting yourself in debt. If you have the cash saved to go on vacation then do it. If you are going to have to put it on your credit card then maybe you should consider staying in town this winter. Think about it, after coming back from such a fun sun filled vacation you have to deal with the stress of having to pay the trip off at 18% interest. Young people often feel that they should reward themselves a bit too often. Nothing wrong with going out to a nice restaurant after exams but is it necessary to go out every weekend?
Media. Yes the media deserves their fair share of blame. The media and pop culture are always influencing young people to make financial decisions that will have negative long term implications. I know it is foolish to not take responsibility for your own actions but all of the negative influences around young people definitely play a key role in regards to financial decisions.
That is all for today but you should definitely expect many more articles to come out on the issue of debt, a subject that I feel I have so much more to write about.