I have never in my life owned a Credit Card and besides the house bought back home (in Romania) - purchased with a loan, I have never borrowed money from anyone.
This attitude gave me a freedom that few people have it and many crave it: the freedom to work for passion not for money, the freedom to speak my mind and not be afraid of losing a job, the freedom to leave a job if anything was bothering me, the freedom to take a sabbatical because I needed some time off and not think about next month's rent/bill.
Things had to be different here in USA, because here everything is on credit and having loans or debt helps me create a credit history that will later translate into better intrest rates.
Hm... so, basically I have to borrow money, receive a bill at the end of the month, be careful to pay it on time and thus proving that I am a trusty and reliable customer.
At first I though this is futile and unnecessary to borrow money when you don't need to, but having no credit history (like I do now, since I am new in USA) or a bad credit history (due to missing payments on any bills) means you have to pay extra for any service:
- rented apartment
- internet connect
- phone service
- having the biggest interest rate on the car loan
- electric provider...
basically anyone that will send you monthly bills.
So, we had to accept the fact, that we had to make a loan for the car and use a Credit Card.
This meant that my attitudine towards spending money had to change. I am now constantly aware of every bill I pay and how much money I spend each time I take out the Credit Card.
Why? Well let's start with the facts:
- you earn(supposedly) 1000$ a month
- you have been approved for a Credit Card of 500$.
How much money do you have to spend?
Some people might think they can spend 1500$, but that's not true. You have to spend no more than 1000$, else you will owe someone money and that translates into having a debt and being a slave to the system.
You will lose your freedom!
I'm not saying you shouldn't spend money - buy yourself whatever you like and know what you can afford.
So if you really want something that you can't afford, work harder and get a better job, but don't dig your own financial grave.
Uff... look at me giving people financial advices :))
More about this in a future post!