I'm going to say something that is bold, but it is also true. You can't abuse credit cards if you want to retire comfortably or at a reasonable age. They are bad for money.
I used to owe a lot of money on my credit cards. Part of what I did was smart because it helped me buy books and other things I needed for college, which I paid for myself. Some of it, though, was just stupid. Once I changed the way I thought about my debt, it only took me two years to pay it off, even though I wasn't making a lot of money at the time.
Take a look at an example. Now, the average credit card debt for a family is almost $10,000. Let's say you owe $9000 on your credit card and your interest rate is 14.9%, which is low for most people. Depending on the company, the minimum monthly payment is likely around $150. If you only made the minimum payment and never bought anything else with that card, it would take you 111 months to pay it off. A $9000 credit card debt will take almost 10 YEARS to pay off? That makes no sense. To pay off $9000 in debt, it would cost you about $16,600.
Let's look at the same balance again, but this time with some different and probably more common factors. Take a credit card with a $9000 balance and a 28 percent interest rate, which can happen if you miss a few payments, and you only make the minimum payments. If only the minimum payments are made, it will take 1984 months to pay off the $9000 balance. I don't know about you, but I'm not going to live 165 years to pay off my credit card debt.
Obviously, it wouldn't take you that long to pay it off because your estate would cover it when you died, but it shows the point of my article. How do you plan to retire comfortably, and not early, if you have this debt and other debts hanging over your head?
Many people don't realise that you can do a lot more with the money you save by not giving it to the billion-dollar banks that give you credit cards. When I was at my worst, I had to pay $400 in credit card interest. When I finally paid off my credit cards and stopped using them, I found that I could easily pay cash for the things I used to charge. Not only that, but I also found that when I took money out of my bank account, I was much more careful about what I spent it on.
At age 27, I decided that I wanted to be able to retire at age 50 and spend my free time with my kids and grandkids. I thought it was better to make sacrifices when I was younger than to have to deal with my mistakes when I was 70. Who wants to be bagging groceries for high schoolers at the register when they are 70 years old? I don't think so. Obviously, it could happen anyway if I get sick or some other event wipes out my retirement savings, but I can't do anything about that. I can stop being stupid, though, and I wanted to do that when I was young.
I want you to learn from this article that credit cards are bad for you. Every year, credit card companies make billions of dollars in profit, and there's a good reason for that. Many people think that insurance companies like to "screw" people just like credit card companies do. The difference is that when you give money to an insurance company, you at least get something back, as long as you buy the right products.
Insurance companies are wealthy because they invest the premiums you pay them to make more money. Most of the time, insurance companies pay out more money on auto and home claims than they get in premiums. "Earned premiums" can either make them money or lose them money. (Sorry for all the insurance-speak.)
A credit card company doesn't do anything for you except let you spend more money you don't have. Credit cards should only be used in an emergency, and if you think that way, you'll probably be next to me on the golf course in 20 years.
