After observing the April 30 Blogosphere Day of Silence for the VA Tech victims, I’m back again.
Today, I want to highlight a somewhat “amusing” read some 2 days back from the New York Times. The New York Times has an interesting article that highlights an increasing number of people who are turning to churches or getting back into the Bible, which is all good, except that they have one thing in common – financial debt.
Although accurate statistics are hard to come by, here are a few links with statistics or that references to debt figures:
- Personal debt in the UK
- Credit card stats in New Zealand
- Credit card situation in Hong Kong
- US Federal Reserve Board consumer credit statistics
But what does these indicate?
Worldwide, modern day financial bondage is on the rise. The article highlights a a verse in the Bible – “Proverbs 22:7“, that speaks of a borrower being a slave to a lender. It’s quite uesful to make that comparison that borrowers are slaves to the banks and credit card companies the next time you reach out for that piece of plastic.
With easily obtainable credit cards nowadays, it really is easy to fall into a financial strap by not really watching that card balance. In my line of work being in the financial sector, I see it all the time. There are people with lots of money who think they can hold down so many accounts and take on so many loans and have 10 credit cards with 10 different banks; suddenly they are no longer so rich anymore, and they don’t even seem to realize it!
I think you may have heard of them before, but in any case it is worth mentioning them again:
- Live within your means and if you need to cut down that extra spending, than do it.
- Pay back more than the minimum monthly. The minimum payment is always “small”, but ultimately you will end up paying back a whole lot more. Don’t forget the high interest rate.
- Don’t fall for reward redemption point schemes as they usually get you to spend more. What’s the point of a free Ipod, when ultimately I need to pay a lot more to bring down my card balance?
- Read the Terms & Conditions of your credit card(s) carefully. I know it’s boring, but different cards have different terms. Some may impose higher interest rates if you default on payments.
- Make it a point to monitor your credit card statements. If there are any frivolous or dubious little transactions that don’t add up, investigate or cancel them as need be.
This concept of “Living within your means” makes for an interesting discourse. How $20,000 a year can actually be more sustainable than $200,000 a year? I figure it is just mostly a matter of self control and less to do with Economics school. 🙂