News Apr 1st 2016

College Credit Card Debt. Main Reasons

happy student with a piggy

Is a lack of proper financial planning the real reason why personal credit card debt is now at a world high? Is people's inability to fully understand money and economics the reason why they are in debt? Are people with credit card debt less intelligent than people without credit card debt? The answer, is yes, yes, and yes

Improper Financial Planning

Debt itself is not a sign of improper financial planning. Sometimes, debt is the only way a company or a person may progress. Credit card debt that is not paid off within a month “is” due to a lack of financial planning. A person should have planned a little better and/or simply not spent the money in the first place.

A credit card is not used to help a person or company advance in any way. If it is used in such a manner, such as to buy a car or energy-efficient washing machine, then that too is a sign of improper financial planning. After all, there are custom-made loans for such things, and people should ideally save up for such things because being without them is not crippling or a big hindrance in our society.

What About Students?

A person on a college budget may be tempted to overspend by using a credit card, but that is a strong indication that the student is not budgeting his or her grant/loan money correctly. This is a clear sign of improper financial planning.

Inability To Fully Understand Money And Economics

It is staggering to think of how many people this applies to. You often hear deadbeat dads on daytime TV shows say they will not give the mother of their child money because the mother spends it on herself. It demonstrates an epic level of ignorance when it comes to money. The same is true when you hear people talk about how much they “think” their car is worth, or how they do not understand how a couple with one breadwinner (earner) is not 100% owner of the marriage wealth when they divorce. They are all signs of a general and distinct lack of understanding of how money works.

Credit card debt is just another sign that people do not understand money and economics; otherwise, they wouldn't have credit card debt. One student once said that credit card money is like spending money you haven't earned yet, but that is only a fraction of the problem. Not only do you repay the balance, but you also pay interest. You also lose the interest you would have earned if you had not spent the money in advance, and you set back your wealth building potential.

What About Students?

If you think you are on a tight budget now, then how do you think you will cope when you have yet another expense every month? You are making it even more likely that you will struggle in the near future and may force yourself into further debt.

Credit Card Debt Is A Sign Of Poor Analysis

This is not strictly true, so let us clarify the statement with, "People that are in credit card debt are less intelligent than people without credit card debt." The sad fact is that most people's egos will not allow them to accept this statement. They will either not believe it, or will assume they are the exception.

Truly intelligent people will both accept the statement and then work to get themselves out of credit card debt as soon as possible so that they are no longer marred with the rest of the credit-card-debt club.

What About Students?

Some say that the students with the most credit card debt drop out because they are in so much trouble that they need to get jobs. However, the reason is that they are not smart. If they are taking a college/university degree and have decided to put their qualification at risk by overspending on a credit card, does that sound smart to you?

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