Are Credit Cards Bad?

Credit Cards bad, or credit cards, good,

or credit cards neither good nor bad.

For a get into all of that, and plenty more things, I want you to know that, unfortunately made a lot of good financial decisions over the course of my life. And I’ve made pretty much all the bad financial decisions over the course of my life. So in my 20s, spent a lot of time living paycheck to paycheck, not paying attention to my finances at all, and using and abusing credit cards. So there is without question a way to properly use credit cards, that’s when you use them and pay them off on a monthly basis. I know a lot of people, this is me, now, they use credit cards for a lot of reasons. Use credit card instead of a debit card, because essentially, you’re using the credit card companies money instead of your own money. And then credit card companies also offer bonuses points or credits, or whatever. So if you are able to correctly effectively use credit cards, which means again, you use them to pay for things by them, you get points, but you pay your balance off at the end of every month will then do that. So that’s where I’m coming from, by no means am I perfect. I am a reformed, improved user of credit and credit cards today. I absolutely use credit cards. Many yesterday’s ago, I did it badly. So I had the opportunity to speak with Mr. Martin birch on the lifeblood podcast this morning. So awesome conversation. He is CEO of

an information company digitizing other organizations we talked a lot about, about elections. And we talked about classified documents. And we talked about security and all of these things and and artificial intelligence. So lots of really cool topics, really smart person enjoyed my conversation with him. Before we started recording, he mentioned how he has a passion for financial literacy and for financial wellness and travels a lot for his work. And when he was at the airport just the other day, he was in front of or behind two young people talking about how they were broke, and they’d maxed out their credit cards, but it was okay because they had gotten a new credit card and it was going to be delivered pretty soon. And then he referenced how he was sitting in on a presentation from some kind of a financial professional and they shared slides about how the majority so well over 50% of Americans didn’t have any money set up for emergencies. They’re not doing a great job savings. So when an emergency did come up, they were reliant on either credit cards or reliance on family to help bail them out. So that just got me thinking.

And I think about money all the time. I’m just I’m immersed in it, because I’m a financial person. And sometimes I forget, like maybe there’s people out there. And obviously, obviously there are that don’t really understand and or and or haven’t thought it all the way through, haven’t thought through the second, third, fourth order effects of what happens when I’m using credit cards, and I’m not paying them off. So I wanted to talk about that wanted to talk about some of the dangers of credit cards. So the Buddhist and me says that a credit card is neither good nor bad. It’s just a credit card.

Me today’s version of me says credit cards are the worst. In fact, I think credit cards are one of the worst things that are afflicting our society today. One of the worst things that are afflicting our culture today used to be that you could run out of money. I remember a time before credit cards before I had them where if you ran out of money, you just stopped buying things. So

that was pretty easy. Now that’s not the case anymore, because everybody has credit cards, credit cards are pushed on young people all the time when we are vulnerable and susceptible. If you had told me when I was whatever age teenager hey, here’s, here’s five grand, go ahead, buy whatever you want to be like Awesome, let’s go let’s let’s go buy $5,000 worth of stuff. And I would have gotten myself in credit card debt immediately. And again, I did that in my 20s so I speak from absolute personal experience. But anyway, today I do believe that credit cards are an absolute burden

It is, they are the killers of dreams, they are the killers of flexibility that are currently the murder weapon of, of personal finance. They what they are one of the main drivers, the main tools behind why so many of us struggle with money, why we are not doing well, while we’re not on track all those things. So I want to go through a bunch of different problems that I have with credit cards. By no means is it a perfect list, I be I’m always excited to get feedback and to hear from other people and to find out where I’m wrong, where I could be more, right, less, right, whatever, omit add all the things, let me know, please. So when you use a credit card, you are paying an interest rate on that credit card. So whatever balance that you have, you’re paying an interest rate on that, if you pay it off within 30 days, then you may not be charged that interest rate, it all depends on whatever your credit card says whatever the user agreement, how your card works. So it’s really important to understand that right now, the average interest rate credit cards, the United States is 21.88%. That’s really high, really high. I don’t know what kind of investor you are. But it’s tough to get a 21.88 rate of return, certainly safely. And with credit card debt, you’re guaranteed to be assessed that 21.88% over and over again every month. So that is crushing that is crippling, that is one of the main reasons that we get stuck in credit card debt, because it’s really hard to get out.

As a time value of money, money has time value. So here’s here’s the second one, money has time value. And what’s simple about that is think about it this way, the longer you wait to start pursuing your most important financial goals and objectives, the harder it becomes to reach them. If you started saving for your retirement at 20 years old, you can put $100 a month away, and at 65 Probably have well over a million dollars saved, which is what it will take at a minimum for you to become financially independent, you will need to have amassed at least a million dollars probably more than that. But at time of recording, that’s what you should be planning on. So if you started at 20, it’s a lot easier than if you waited till 30. You waited till 40 to wait until 50. If you wait until 50, you’re gonna have to save 1000s of dollars on a monthly basis in order to get close to getting a million dollars saved up by 65. So the longer you wait to pursue your financial goals and objectives, the harder it becomes. All right, there’s an opportunity cost these are trade offs. So when you decide to be using your money, or rather, when you decide to be buying something with a credit card,

you are choosing

to not do something else to not to anything else. This is why it’s really hard once you get stuck in credit card debt to get out.

Okay, so when you make the decision to go and allocate $100 towards one thing towards buying something, you’re choosing to not allocate it towards something else.

And I’m not saying stop spending money. I’m saying go into this eyes wide open for you use a credit card to buy your next thing. Let’s go in with eyes wide open. It’s the whole lot time value of money, opportunity costs. There’s no solutions. There are just trade offs, as Thomas Sol famously said. So every choice you make you were saying no to everything else. Keep that in mind. Number three, you limit your options. Being in debt absolutely limits your options.

sad reality is too few of us like our jobs. sad reality is way too many of us hate our jobs. If you are stuck in debt, if you are burdened by debt, you are stuck, you’re stuck in that dead end. Or if it’s not even dead end that soloists maybe it’s not even solace. You’re stuck in that job you don’t like you limit your options. Instead of you’re debt free. You got money in the bank. You can afford to do something entrepreneurial. You can afford to walk away from your nine to five and find a different job a different career

that will provide you with more of what you want, whatever that might be. So it’s options. you limit your options when you get yourself in credit card debt debt in general, but certainly credit card debt stress. The next one is stress. recently read how

77% of us Americans are stressed out about money. We have anxiety around money, and how could we not?

If the majority of us are flat as broke, with no money saved up, reliant on credit cards or family to bail us out, that sounds super stressful. And again, that was me and my 20s. So I know if your credit card debt, you know, too, but if you’re not,

and you’re not sure if credit cards are bad, take my word for it, and everybody else’s word for it, who is experiencing stress and anxiety stuck?

Trying to get out of debt, but it’s really hard.

Money touches everything. So here’s, here’s the next one. Money touches every aspect of our lives.

After infidelity, money stuff is the number one leading cause of divorce. So it touches everything, and it destroys lots of stuff, destroys relationships destroys families. That’s obviously awful.

Next one, I think that that’s it. I think that those are some of the main reasons or problems for why credit cards are bad. So don’t let me just sit here and complain and tell you about problems, I would like to also tell you a little bit about solutions.

And here’s some tough love for you. That you need to grow up. If you’re in credit card debt.

If if your credit card is your emergency fund, or your parents, your family or your emergency fund, need to grow up.

You need to woman up, man up, cowboy up, cow girl up, cow up. Whatever kind of up you need to do, is what you need to do.

Life is an amazing and wonderful opportunity. But we squander it. We squander it because we’re so short sighted

we can’t see into the future, even though it’s one of our superpowers to be able to look into the future, to make plans, and to create that the future that that we really want. It’s a superpower, I can create the future. When I don’t do that, when all I’m thinking about is today.

I squandered that opportunity. We need to be able to make sacrifices, financial success, sacrifices required. Hard work is is required. Anything worthwhile in life.

Difficulty is required.

You want to be in shape. You want to be physically fit, sacrifice is required. You can’t put whatever you want in your mouth. You can’t lay around, need to have a good diet, exercise.

You want to alleviate financial stress. If you want to be financially successful and independent one day, you need to be able to make sacrifices today.

So delay gratification, make sacrifices, I get it again, beat myself up, took me a long time to grow up till I was probably I don’t know 35 years old, to finally pop my head out and say you know what, maybe it’s time for me to move on from these behaviors. Maybe it’s time for me to reprioritize things. And that’s really a big part of this. So

just sacrificing for the sake of sacrificing not getting the job done. We can try and grit our teeth, and pound through these things. But a wiser course of action is to create for yourself a compelling vision for your future.

To really think about what is it that you want? What is most important to you.

And once you know what that is, make plans, figure out what it’s going to take to get there.

And then put those plans in action. Celebrate your progress every day. Realize that it’s going to take you a little while to get out of debt, realize that it’s going to take you a little while to to build new habits to build new self discipline to build self confidence. But these are all byproducts of the hard work and the progress and it’s all very much worth it.

You are somebody who is perfectly capable

and worthy

and deserving of financial success. But you need to accept ownership you need to do the work you need to do the things that it takes to get there. Service of helping you to do that. I have three free courses you can access not selling you giving these to you. You

Go to money alignment academy.com. Go to the Courses tab. And you can access our goals course which will help you to create that compelling vision for your future. You can access our values course, which will help you figure out what your biggest priorities are what’s most important to you. And then you can access our get out of debt course, which will help you put a plan together for getting out of credit card debt, moving on to that brighter future. So that’s what I want for you.

I just need you to want it more than I want it for you.

Do your part by doing your best