In the “good old days”, customers completing their shopping would be asked, “Will that be cash or credit?” In the “good ole days”, most customers would reply, “I’ll pay in cash, I don’t like owing anyone with credit”. Merchants and manufactures alike, preferred transactions were completed in cash. In doing so, all loss ends were tied up. Real money was exchanged for real services and merchandise. That was in our parents and grandparents day. Debt was not America’s worst enemy, but it was coming.
In today’s world, transactions have transformed into, not a question; but a demand business be transacted in credit. Many, if not most business activities are performed using a promise to pay in this manner. This credit is the guarantying of payment by someone else for a fee. The purchaser then pays the guarantor the amount plus fees in the form of monthly payments. Using this method, individuals and entities acquire more stuff, more quickly and more debt.
The proliferation of credit has gained momentum and prestige over the decades through acceptance and promotions of greed. By creating a desire to gain, get and have; credit has been the ideal tool for gaining possessions, or use of possessions and services. As a result, not only has individual’s come to have more, but to owe more.
Purchases made using credit cards, debit cards and other forms of credit, has far out-paced the use of cash. Billions of transactions are performed with the assistance of banks, credit unions and credit processing centers, nearly all charging fees. Promotions are constantly advertised saying, “buy now pay later no credit check”, are bombarding consumers. These offers are aimed at homeowners and renters alike. No credit check means, consumers are paying far more than the true value; no need for a credit check.
Homeowners have been treated to, home buyers tax credits; only to pay more in taxes in a different form. Auto owners were tempted with, “cash for clunkers”; and they increased their debt load. The more often credit is used the deeper the debt hole gets for the user, and the buyer is not the owner until the credit charge is paid in full. They are only the end users and the end payers. For many this is a good system until, there is no money to make the payments. Credit purchasing habits can and will destroy a person, a family, a business, and a country.
As of March 14, 2010, at 8:18:49 GMT; the outstanding debt for the United States was over $12.5 trillion. The estimated population of the United States was 308,004,824 individuals. If divided equally among the citizens, each man, woman and child owes $40,860.29. The national debt is increasing at a rate of $3.99 billion per day. At this rate, how long will it take the United States of America to pay off this debt? One other thing; unemployment is over 10%, and manufacturing is being taxed into bankruptcy until, or unless they leave the country. Now the question is, “Will that be cash or Credit?”
The problem has been identified as the excess and unwise use of credit. As convenient as credit is, use of it has become a boat anchor around the neck of a nation. Leadership in Washington can only see gaining more power more important than paying off debt. Simply put; the more individual citizens owe, the less we have to spend ridding ourselves of real enemies to the people. The use of cash for as many purchases as possible takes profits from credit lenders in the form of lessened fees and charges. Take away their money, you take away their power.
It will be up to the individual and business entities to take control of their financial futures. Depending on someone else, especially government to correct the coarse being traveled is and invitation for disaster. Talk radio host Dave Ramsey gives very good advice and direction on personal and business financial management habits on his website, www.daveramsey.com. The National Foundation for Credit Counseling is another good source at www.nfcc.org. Both are in the business of helping people correct bad decisions concerning credit.
The credit bubble is about to burst. When that happens, THE GREAT DEPRESSION will be a minor blimp on the screen compared to what will hit the United States and the world.