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Restrain
Yourself
It's
only a loan!!!
By: Marcial
Robiou
Many
young adults don't know that they are the number one target market
in America. It makes sense for retailers; teens are the future. If
retailers somehow get young adults to buy their products now, then
they'll buy them in their adulthood and possibly for their future
families. Not only are young adults the future, but they spend more
freely than adults.
"Teens for the
most part get an allowance, don't pay rent, mortgage or insurance
costs, and also don't pay for their food," said Kurt Bamard,
a retail industry consultant.
As a result, store
chains that cater to young adults posted profits (compared to adult
store chains), totaling $170 billion in sales last year, with $70
billion strictly for clothing. This generation's young adults are
different in one very important way from past teens; we have plastic.
Plastic (credit cards)
gives you more power, more say as to what retailers should sell and
how they should sell it. Credit cards benefit both you and the retailer.
You get what you want and the credit card company pays the retailer.
Everyone wins.
However, someone has
to pay the credit card company. This is where most young adults slip
up. They either forget they have to pay somebody, or they keep putting
off paying the credit card company until the interest accumulates
and they suddenly have to pay an amount that's three times as much
as their original purchase.
When young adults
first get a credit card they think they're on easy street, able to
buy whatever their heart desires. Well, yes but the reality is that
you have to pay it back. The simplest way to manage credit cards is
to think of it as a loan. You see something you want, you ask the
credit card company to lend you the money and you'll pay the credit
card company back. If you don't pay it back, then some goons will
be sent to your house to break your knees, capeesh?
Here's how to avoid
the real goons of credit card debt. Once you get the statement from
the card, pay all of it right away. Can't pay all of it? Spent your
money on candy and beer? Then pay off as much as you can. Whatever
you don't pay is your balance, which the card company will tack interest
onto and that makes what you originally owe increase. Credit card
debt is nothing to laugh at. If you're not too clear on how it works,
then there's a simple example at the end of this article.
The urge to buy is greater when you first get a card, but you have
to restrain yourself. Here are some tips for shopping;
1) Whenever you can, use cash, checks, or check cards. All of
them have a smaller limit than credit cards. Once you reach into your
wallet/bank account and have no money, you can't buy anymore junk.
2) Use your credit card only in an emergency (strappy heels
or video games don't qualify).
3) When shopping, try to wait for sales and/or clip coupons.
If you want more advice, go to the Managing My Money website at www.managingmymoney.com
for tips on how to save and handle your money. Shop safely and remember,
don't use cards unless you have to.
Here's how to figure out the interest on a credit card:
EXAMPLE:
Let's say you bought
some clothes on your credit card for a total of $800. The statement
comes in and you don't have the money, so you send a check for $50.
Now you owe $750.
$800 (original
purchase total) - $50 (check paid) = $750 (new total)
Your
credit card company charges 19% APR (interest). Your next statement
comes in and you now owe $761.88.
Why?
I = Interest
Interest = Principal
(new total)* Interest rate (converted into decimals from %) * Time
(in years)
So…
I = $750 * 0.19 *
1/12 years
I = $142.50 * 1/12
years
I = $11.875
$750 + $11.875 = $761.88
(New total and what you owe for the next statement)
* Based on The
New York Times National Sunday
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