Overspending Is A Threat

Have you ever written a check for something you knew you didn’t have the money for? People do that more than you think. They play the game of “robbing Peter to pay Paul.” This is a common practice that can lead to debt and bad money management.

When you take a job, you are given a salary. The salary only changes if you get a promotion. For those that work an hourly wage, the number of your checks changes if you work more or fewer hours each week. Despite our paychecks being reasonably consistent, people continue to spend more money than they earn.

One cause is the “buy now and pay later” trap. Knowing that the first payment is two years away gives consumers a false sense of security. They may have walked into the store to purchase a bed and ended up walking out with the entire bedroom set because they didn’t have to make payments until 2009! If you didn’t have the money to purchase more than a bed in the first place, what is the logic of purchasing furniture worth three times that much? In two years, you may still not have that much.

Credit cards can also be a trap if not used with discretion. Statements come at the end of the month. Erroneously you might think that although you don’t have the money now, you will have it when the bill comes. The problem with this thinking is that you haven’t figured the money you just charged to the card in the budget. Once you pay the other bills, there won’t be enough to pay the card balance, so you pay the minimum. An unpaid balance on the credit card results in a larger balance next month, even if you don’t charge anything else.

We have to learn to be financially responsible, or the debt situation will worsen. More people will file for bankruptcy or pay credit counselors to fix the debt problem. While these options are available to help those who have gotten deep into debt find their way out, far too few people take advantage of the offered help.

Carrying a certain amount of debt has become a status symbol. Everyone else has debt, so why shouldn’t I? People are not pressed to get rid of their debt. As long as they can pay minimum balances, it doesn’t seem to matter that it will take five years and several hundred more dollars to pay off a credit card.

As long as a credit company or store is willing to extend more credit, the problem of overspending will continue. How we handle money affects the next generation of consumers. They learn from watching us. What are we teaching them?