Re-write the Money Script
We’ve all seen those movies where we know what’s coming, but the characters in the plot just haven’t a clue. Annoying, isn’t it? How can they be so blind, so stupid? The answer is simple – the writer and director manipulated the story to be that way, then told the actors to go along with it. In real life, the scenario isn’t much different. There are manipulators and players. The fat cats control the storyline and we act it out, exactly the way it was written. But what if we could re-write the script – maybe not all of it, but bits of those scenes we are actually in? Then our character might not end up hurting so much.
Saving On Credit
Let’s start with credit and try to understand how it works. The idea is to buy now and pay later. Maybe it’s necessary in some cases. Not too many have the cash on hand to purchase a home, or even a car, so securing a loan is likely to be the only way to acquire them. A loan, however, will cost extra not only in interest, but is almost certain to attract establishment fees, account-keeping fees and probably State and/or Federal taxes. By the time the loan is paid out, costs will have ballooned. Obviously, these costs need to be kept down from the outset and for the duration of the loan.
How can this be achieved? Shop around. There are banks, credit unions, loan societies and agencies, all eagerly awaiting the unsuspecting borrower. Check them out carefully. Compare their current interest rates, then make another comparison of past track records. Has one tended to fluctuate less than others? If you’re okay with your maths, put some figures in the calculator to see how much you might have paid back over a period. Use the base price of the item you are currently thinking of purchasing and work out the interest that would have been payable over a couple of previous years. This will only be a rough guide because there are other factors to be considered, but a comparison of the results could show up the less attractive options which are to be treated with caution.
For lower cost items there is the amazingly-convenient credit card. When first introduced into Australia back in the 70’s, it was only issued to those bank customers who were considered a relatively secure risk. Now almost anyone can have one and there are disturbing reports of cards being made available to babies and, believe it or not, dead people! I even recall someone’s pet dog being offered one!!! This may lead to the misconception that financial institutions have gone crazy. Forget about it – they know exactly what they’re doing.
Another misunderstanding is the cost and who pays it. The banks imply they do, which is why they keep hiking the interest rates. In truth, we all bear the brunt, whether we use credit cards or not. Each time we buy anything, the price is loaded to cover all costs necessary to make the item available in the first place – manufacture, freight, taxes, advertising, and the percentage charged for the credit-card system. That includes the short-fall when the banks themselves get ripped off. And don’t think that strictly cash deals are a saving. Somewhere in what’s left after that generous 15% reduction is a small charge to offset the sales to others who buy on credit.
The bottom line is – everyone pays for the availability of credit, so why not use it? Many of us do, of course, but not always to our advantage. It’s too easy to accept the offer of a new card, or an increase on an existing one, whether we can afford it or not. However, before going into the pros and cons of usage, lets look at the initial acquisition of a card.
Taking up the offer received in the mail is one way. It may appear generous, perhaps a godsend to someone with a lousy credit-rating, but they will still have to disclose their current financial status – salary, existing outstanding loans, etc. Anyone reluctant to divulge this information, or groaning in disappointment at having to, should screw up the offer before it screws them.
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