Is it possible that credit is more valuable than money in today’s economy? We made the jump from a paper and coin driven society to a plastic card dependent one with relative ease. It is that intangible swipe of that worn down and de-magnetized card that leads to our false perception that we are limitless. There was a time when a dollar in your pocket meant something, it was something the represented an hour’s wage or a season of cultivating. The dollar in your hand was gripped with calloused fingers and palms. A dollar was significant. Now commercials epitomizes our machine that moves with the swipe of a card named economy and commerce with zero regard to the bank statements that card represents.
Things have changed haven’t they. With that shift came the perilous “pay for it later” mentality that led to extreme credit card debts and variable homes loans. Put off the inevitable and enjoy today can be seen on the faces of new home owners and shopping bag wielders. Danger lurking down the road we continued totake advantage of zero interest introductory rates that adjust to 15-30% within a year for credit cards and 3-5% adjustable home loan rates that are now realistically adjusting to 9-15%. We blame lenders and loan officers first (because we call them by name, credit card companies remain anonymous in our minds for some odd reason and they escape the blame of what should be unlawful interest rates), but the reality is even if they told us about future risks and pitfalls, we didn’t want to think about it or worry about something that is 2-3 years away. So here we are.
The rules are changing in the home loan realm so that only people with good credit can enjoy the decreasing rates. The double whammy is that we racked up so much debt these past few years that our credit scores are dismal to say the least. Too many credit cards, one or two late payments and the one that went to collection……oh that is why my credit is so low. That makes sense.
The diligent folks who read the fine print on credit cards and stuck to 30-year fixed loans are the real winners in this credit driven economy. In a rich get richer fashion that simple detail of protecting your credit makes the biggest difference in today’s economy than anything else.
Hopefully the new economy will force the reckless spenders to be more responsible, force people to budget and pay bills on time. I for one would appreciate if my tenants paid on time. That would be the real fuel behind an economic machine, actual payments made payable on or before the date they were due. The rightful losers would be the diabolical pay day loan caliber institutions that charge criminal rates.
Although the tight restrictions are putting the real estate industry in a proverbial head lock and punching it on the top of the head, it is rewarding the responsible and slapping the reckless on the wrist. At the very least we are not acting as enablers to the unconscious spenders.
If only the rules and spending habits towards responsibility actually worked. I am afraid that once you have a taste of luxury, no matter what that might look like to each individual, it is hard to become consistently realistic about your financial limitations.
“Give a man a fish and feed him for a day, teach him to fish and feed him for a lifetime” within a contemporary context should have the folllowing additiona: “as long as he knows how to budget and pay bills on time or else he is screwed”.
To further the point, follow this link (Here)