Let me tell you about one of the best things about credit cards: You aren’t actually paying for what you buy. Think about it; you walk in to a store find whatever it is that you wanted, and walk out of the store without paying even one of your hard earned dollars. What could be better than that?
Let’s look at an even larger example of this idea. The economy enters a recession and the banks find that some investments they made have gone bad and as a result are in financial trouble to a point where they are going to go out of business. The U.S. government doesn’t believe that that is in the best interest of the economy so they give them money. Then, to stabilize the U.S. economy, the government pumps large amounts of money in to various sectors of American business. In fact, more than 700 billion.
Where did that money come from? Much like a credit card, the money is borrowed. It’s borrowed from other countries, from private investors, and largely, from the future you. Much like a credit card, it doesn’t seem like a problem to spend when you aren’t paying for it right now. I’m not saying that the cause is or isn’t good. Only that there may not be enough talk about when or who will be paying it back.
Do you know how much the government is going to ask you to pay back on these bailouts? Let’s just look at how much you will pay to bail out the banks? According to The Financial Times, each American is going to pay $6,200. Not each family, each American. If you’re a family of 4, it will cost your family $24,800.
There is a political debate to be had here. The yearly salary for the average American is $32,000 so the average American will devote a little less than 20% of their yearly income for a year to bailing out the banks.
The political debate is for another day on another website. I don’t have time to write about the political side of this because the $6,200 I’m going to be paying is going to take a lot more articles than this one. I have a lot of writing to do.
The great thing about credit cards is that you don’t have to pay when you buy but the not-so-great is that you have to pay later and that isn’t nearly as fun, is it?