Say No To Debt
Debt is a really evil thing. Many people are actively aware of this fact, yet they can’t seem to find a solution to evading it. I know so many people who charge up their cards, take months or years to pay them down and as soon as the balance is at $0, they find the need to load them back up.
Since this is not a personal finance site, I will not go into detail about the long terms costs of debt and the negative impacts those costs have on people’s lives other than to say they are substantial. People who think that interest is their only cost are fooling themselves.
How Is It That You Travel So Much
When I try to explain travel hacking to the average person, it goes right over their head. If you have been in this hobby for any amount of time, then I am sure you have experienced the same thing. It is ok. This stuff just isn’t important to most people. They would rather charge their expensive vacation on a credit card and pay it off over the next year. Sigh.
Out of frustration, lately I have taken a different approach to explaining what I do. A different way of looking at everything. I simply tell people that I am leveraging my good credit and lack of debt to save thousands of dollars a year on travel. (And earn cash back!) I am doing it right now and you can to. Call now!
While the successfulness of this approach remains to be seen, it is a good reminder to me of why I make certain sacifices in my life. Why I havent always driven the newest cars or had all of the latest toys. Not only am I not burdened by that debt, but my good behavior is rewarded every time I fly in a premium cabin or thousands of points post to one of my accounts.
Your Debt Pays For My Travel
The economy is improving and people are spending money. This means that the credit card companies are making a ton of money and their marketing machine is out in full force. We are now constantly bombarded with ads for ¨fantastic¨offers. Many of these are good, but the only reason they are so good is because of ¨people¨and their debt.
If you haven’t yet figured it out, the person with debt is paying for my fancy trips. They are the reason I can get these bonuses. You see, I am a minority. A blip on the radar. For every one of me there are many more people who just can’t break up with their debt. It is a sad love story really, but one that I benefit from every day.
While this post is mostly a rant, I want to emphasize my feelings about credit cards and debt. I do talk about credit & deals on this site, but it is not a deal when you are paying 10% OR 20% interest. It doesn’t matter how high the bonus is, you still lose in the end.
For anyone who is new here, credit card debt is something that is to be avoided at all costs. If you can’t be responsible with credit cards then don’t have them. No debt plus no credit is better than debt + “free travel”. Really it is!
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Disagree with the blanket statement that “debt is evil.” Debt is simply a tool that can either be used to your advantage or disadvantage, depending on the terms of the loan and how you use it.
I agree with the notion that taking on debt to finance discretionary consumer purchases is probably a bad idea, though.
You are right that debt is a valuable tool in many situations for business. I have written that in other articles, but left it out of this one because I am mostly talking about consumer debt. There are very few arguments that consumer debt is good. Perhaps the only argument that can be made regarding consumer debt comes to mortgage and property. Even that argument has a lot of holes in it considering what happened during the recession. (With that said, I have strategically used debt to make money and thus agree that a blanket statement isn’t correct.)
Short term debt as in the case of cash infusions in emergencies can be alright, but that is much too high level for this piece. The debt that most consumers deal with is evil. We have a culture of personal debt in our country which really is troubling, because it tricks people into believing that they can have MORE. The reality is they suffer in the long term.
Thanks Jason!
Debt can be evil, particularly when used to fund the purchase of consumable items. Debt can also be a valuable tool to accelerate growth.
While debt needs to be handled with respect, those not using a little leverage for capital growth have lazy balance sheets.
You are correct. This post mainly addresses personal debt in regards to credit cards. Borrowing to accelerate growth in business or even in certain personal circumstances like with real estate can be beneficial when done right.
Shawn, I agree with everything you said. I just posted a comment on a TBB with almost the same thought. There are winners and losers in the credit card game, and the losers are paying for the winners free travel. We can’t all be winners since that would mean the banks are the losers, which they would never stand for. It is unfortunate when friends and family members get into credit card debt and other types of debt. Your last statement about it’s better to have no credit cards in no debt is better than having credit card debt plus free travel. I couldn’t have said it any better than that.
This is a good read.
I recall when I was in college in the 80’s, that credit card hawkers were outside the student center trying to sign up all the kids. Thus it began. My girlfriend was a new student from Italy, but did this stop things up? No way, the Citibank rep helped her fabricate her application so it passed by for example leaving citizenship blank, and claiming I was her cousin as a reference. Her friend from Indonesia was helped to list her advisor as her uncle.
There was a good documentary on PBS called The Secret Rise of the Credit Card.
This still happens all of the time. Of course the banks are under more regulation, but they make so much money off of the credit cards that they need to keep sucking more people in. Thanks Vicente.
Wow, what a clever insight into why you and I are able to travel comfortably and often. I think you are probably right, why else would all these credit cards keep giving me bonus points? Even though it was probably 23 years ago, I can remember the last time I couldn’t pay all my bills one month. It was horrifying, I felt the blood drain from my head. I don’t know how people sleep at night knowing that their debt is incurring ridiculous interest charges every day.