It feels great to be able to purchase expensive items on credit but there are consequences to this luxury. We feel empowered and good about ourselves that we are able to afford that new HDTV or that new car model just by signing papers. But all of these will come back to haunt us in the very near future. This is a reality we all face with credit card spending if we fail to understand that impulse buying now is actually taking away more than what we are getting.
Think of the new shiny items you bought with credit as Dr. Jekyll and the interest payments as Mr. Hyde. It is the undesirable effect of advancing income to purchase items now. Also, every time you make payments to interest, think of the 20-5-20 theory. If you put $20 in a 5% earning instrument for 20 years, it could net you $8,000. What if you can put in double or triple that amount? This is one thing lost to credit card payment.
Another side effect of credit card debt is it prohibits you from getting that bigger house for a bigger family or better health or insurance coverage for your loved ones. The monthly payments make you think twice and could force you to pass up on better opportunities for your loved ones. Until such time that you could pay up your credit card payments, you have to put these dreams on hold.
This could also spill over to your dreams of getting higher education because you still have a big credit card payment. Again, it forces you to reconsider more spending even if it means advancement in your education. These payments also prohibit you from taking either a well deserved break for yourself or even with your family. You would rather make the payments over to your debt rather than use it for a vacation.
One serious downside to accumulating credit card debt is it s adverse effect on your dreams of early retirement. Instead of having enough in your savings to support your lifestyle, you are forced to make payments for your credit card over a longer period of time thus, delaying your retirement. Or worse, you might even be forced to come out of retirement so you can continue making payments on your debt.
There are people who are able to switch careers because they have a different calling or simply because they can afford to gamble on it. With credit card debt, your ability to gamble and look for a higher paying job is limited. This is because you need to have a steady stream of income to meet your payment deadlines. You might be forced to stay in your current job even if you do not like it anymore.
Credit card debts and the stress of meeting your monthly payments can trigger health issues. Anxiety, migraines and even depression are some of the effects of credit card debts. Some could even result to heart ailments. Worst part is that with these known side effects, you might even be exposed to high medical bills because you opted to forego health insurance in favor of credit card debts.
So the next time you decide to purchase an item using your credit card, weigh the value of the item you are buying on credit against the things you will have to let go in the future.