Beating Debt with a Stick. Debt is a Product in America

by: Mark Hergert CEO

The #1 sickness in America concerning finances right now is debt. Debt is a product in our culture and is vigorously aimed at you and me everyday, everywhere. As a society, we borrow more money than the last two generations times two and your online credit report reflects these habits. Some companies make more profit from their credit department than from all the physical products they sell.

But It's the Norm, isn't It?
We are programmed from childhood to make automatic decisions regarding our personal spending habits thus negatively affecting our online credit report. A few 'real world' examples are listed below:

• leasing a car instead of paying for it in cash (unheard of, right?)
• 90 days same as cash (Not really the same in more than 75% of the cases)
• rent-to-own (translation = paying 2, 3 or 4 times the actual value of the product)
• 30 year vs. 15 year mortgages (an accepted lengthy and very costly way of purchasing a house)

What to do? Well, I hate to give the obvious answer here but how about saving money! Try saving money in a money market account for a couple years and then paying for a slightly used car in cash or with a 50-75% down payment. Wow, imagine having that extra money every month that most people dump into their lease or high rate loan. Try saving money for 3-6 months interest- and risk-free for that item that you needed and you might find that you can get it cheaper.  You may find that you want to use your hard-earned money for something more practical. Your credit report will thank you as well.

Penny Pinching is Boring!

Most people today think that to be frugal one must live out of a shack and only make purchases when they are on clearance (or if it's life or death). Well they're only half right. Have you heard the expression "It's the little things that count"? This holds very true when dealing with financial decisions. While large purchases definitely have great effect on one's online credit report as well as their overall situation, it is often the everyday spending habits that accumulate and hold them back from attaining wealth of any sort. What many people fail to realize is that the majority of true millionaires in America (those with net Worth exceeding 1 million dollars) got rich from thinking outside the box and not following the crowd. Try thinking a little more about how you handle your money and you might find that you know more than you think you do.

Summing Up the Debt Sickness Fiasco

A decision as simple as using a debit credit card instead of a credit card shows discipline. Paying with cash instead of credit shows that you have properly budgeted your money and it just feels better to own something the day you walk away with it. Your credit report will also reflect these positive actions. Since the average consumer has little control over their own spending habits, the credit report picks up the slack and in turn there are more negative items to show for it. Even statistics show that using cash when making purchases will greatly reduce spending thus causing you to think harder as a consumer before swiping that credit card. Get off to a good start by seeing what's on your online credit report. By removing negative items from your online credit report you can improve your credit rating. Mark Hergert is CEO, Managing Director of Auto Credit Financial Services. Based in Kailua-Kona Hawaii, Traverse City Michigan.