In last month’s issue, we discussed how the Rich choose their friends wisely. This month, we will be looking at Rich Money Habit #5: The Rich use Credit Cards wisely, the Poor abuse Credit Cards.
There is a misconception among kids today that Credit cards are “MAGIC” cards. They grow up believing that if they had this “Magic” card, they would be able to buy anything they like even if they do not have the money to pay for it.
Kids, make no mistake. Your parents ARE paying for it with their hard earned cash. You may not know it, but they are CERTAINLY paying for it.
Some people say Credit Cards are very dangerous things to have while there are others who say it’s a very powerful tool to leverage on. In my personal opinion, like Money, Credit cards are termed dangerous or powerful, depending on HOW the person uses it. If you use it wisely, credit cards can be the most powerful financial tool you could ever have. If you abuse it, it may destroy your financial life.
The Rich understand this very simple philosophy. That is why they use their credit cards wisely. The Rich will ALWAYS pay off all their Credit card bills in FULL when their Credit card bill arrives. In other words, the RICH only use their credit cards when they know they have the money to pay for it when the bills arrive. That is why they are very rarely in debt.
The Poor on the other hand, abuse their credit cards by spending lavishly and because they do not have enough money to pay their credit card bills at the end of the month, they only pay the minimum amount to prevent the banks from taking away their credit cards. The remaining amount that they still owe will be charged interest and as long as they do not settle their credit card bills in full, they will continue to pay interest to the bank. That is how the Poor get themselves in serious debt. They do not realize that they are spending Future money (money they do not yet have).
So kids, if you want to become Rich, learn good credit card habits NOW, even when you do not have a credit card yet… so that when you do get your own Credit cards, you’d know how use it wisely.
In next month’s issue, Rich Money Habit #5: The Rich Plan their Retirement, The Poor merely HOPE they can Retire.
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