Posted December 18, 2008
In the hard times we are currently all going through, it’s not surprising that we’re all finding it tougher to get credit. But if you have credit cards with available credit on them already, are you finding it too tempting to say no to using them?
So it seems the banks and building societies are increasingly cutting back on offering credit to people. If you were almost at the stage of being able to paper your entire home with the sensational - and unasked for - credit card offers flooding through your letterbox, you may have noticed that they are now nowhere to be seen.
We’re all well aware by now that whatever currency we are using has to stretch further in our everyday lives. Food costs more, bills have risen and we are all that bit more concerned about our jobs.
So what do we do if we find that we cannot make ends meet? Would you be tempted to flex your plastic and worry about the cost later? We are now in the most tempting time of the year, with Christmas upon us and the New Year sales no doubt providing another temptation beyond. And it could well be the case that some people are still persuaded to buy now and think about how to pay the bill later on.
But are you one of those people?
Christmas tends to be a time when we are all more tempted to have a great time and worry about the cost later - whether that is in terms of our credit card bill or our waistline. But in times like these the habit of putting off paying for things until later could cost you dearly.
Since overspending is a habit, it’s necessary for us to break that habit if we are going to survive the current downturn. The economy as it stands is not likely to bounce back in a hurry - and if the worst happened and your job went with it you don’t want to be faced with any more debt than is absolutely necessary.
Basically speaking, if you ever find yourself standing in a shop thinking about paying for something on a credit card, make sure you stop and ask yourself why before you actually go ahead. Is it just until you get paid, when you will pay it off in full? Do you really need the item in question? Or is it an impulse buy?
Whatever you think the answer might be, take a walk round the block before you actually decide whether or not to buy the item or not. You can always tuck the item in question towards the back of the display to give you some extra time to think it through!
There is an article on the Wealth Intelligence Academy blog which takes a deeper look at this idea of buy now, pay later. You can read it here. The point is really that no matter where you are buying the item from, what currency you are using or how you will pay in the end, you need to be aware of what you are doing. If you aren’t, you will end up creating real problems for yourself.
It all comes down to how organized you are and how much you trust yourself to handle your money. If you know you are weak in this area, you should leave your credit cards in a safe place - and that isn’t the wallet you take shopping with you!
One advantage we have at the moment is that many shops are discounting goods to make more sales. And while it is hard to think of it, businesses that are closing down will also be heavily discounting stock. This makes it easy to try and buy as much as you can cheaply, so the need to use a credit card in the first place becomes less necessary.
If you can recognize yourself in this story, be more alert the next time you go out shopping. You might just find that once you become aware of your habits and triggers, you can manage your finances better anyway. We all get the urge to buy something frivolous every now and then, but being more aware of money and how we use it is even more important now than ever.
The moral is, if you want or need it, pay for it now if you can. If you can’t, you need to think about what the long term costs will be if you were to pay for it later.