If you pay what you owe, you'll know what belongs to you. ~Benjamin Franklin. What a great quote to remember when people have the most credit. Because it's so easy to get credit, many people, especially young people, have gotten into a lot of trouble with debt. At one point in my life, I thought it was great to be able to get anything I wanted.
My father used to tell me that people only bought things they could pay for during the Depression because so many people were going bankrupt. He said that people were losing their homes because they couldn't even pay the mortgages. His generation grew up in a time when things were very bad, so they knew that if they really needed something, they had to save for it.
Whenever I bought something on credit, he would tell me that I was paying for a "dead horse." I liked something I didn't own, but I was still making payments on it long after it was "OLD" and no longer worth anything. Some people can buy things like furniture today with no down payment, no interest, and no payments until later. The problem with that is that the furniture wears out before the first payment is due. It's like "riding a horse until it dies and then you have to start paying for it," or PAYING FOR A DEAD HORSE.
When my wife and I were putting together a bank statement to buy a house, I finally got what my dad meant. It asked us to write down how much money we had. When I added up everything we owed to banks and credit card companies, our debt was clear as day. But when I added up what we really owned and how much money we made, our finances were in the red. When you figure out your net worth, you'll see that the things you buy on credit don't count toward it. This is because you have to subtract the amount you owe each creditor from your total.
It became clear and upsetting that we owed a lot of money. We spent all of our money on the boat, camper, new clothes, and cars, so we had no money left to save for the future. We decided because of this to stop buying things we wanted and instead save for things we needed. We started paying off our debts and rolling them into one loan. It took us a few years to get our debt down to a level where we could handle it without carrying balances on our credit cards.
Then we stopped looking back at all the things we bought and went into debt to own and started saving our money for the future. We had started to learn how to live on what we could afford. Parents need to explain this to their kids, like my dad did by saying that credit card debt is like "paying for a dead horse."
Today, many people have so much debt that bankruptcy is at an all-time high. Banks are making a lot of money from interest on loans because many grown-up children want to own things right away that took their parents years to get. When bills aren't paid on time, extra fees are added, and the debt starts to get out of hand.
There would be less debt if more people invested their money in their futures instead of spending it on things they don't need right now. People would know what they own if they only bought what they needed instead of whatever they wanted. "Pay what you owe, and you'll know what's yours," said Benjamin Franklin. People would only buy what they could afford and what they needed, and they would know exactly what they OWN.
