Urge For Credit

Once in a while, we may have an urge for credit and at times the urge may seem to be constant for some people. We know we have the urge because like a drug addict we really itch for increased credit line, new credit cards, and mortgage re-finance. It goes back to the concept that as we desire more, we have less and thus we continue to want more. As every thing else in life, we are programmed to desire and want more credit which allows us to live beyond our means, similar to the desire of wanting a bigger house, bigger car, bigger food plate, and the list goes on. Dr. Wayne Dyer says if the cup is full, stop pouring. This philosophy can be applied to every aspect of our life including our urge for more credit. Most people have more credit line and debt that they can handle but they continue to ask for more, requesting new credit cards or credit line increases. The funny thing is that if credit companies reject people who are in debt up to their necks due to their high credit risk, they get upset for being rejected. In my opinion, these people should be happy to be rejected because if credit companies which make a living out of high interest rates reject new credit requests by people with high debt ratio, that’s an indication of bigger problems to come for both the credit requestors and credit companies. It’s almost like giving a drug addict a plate full of drugs and kindly ask him or her to consume with caution and over a period of time. It would be naïve to believe that the drug addict will be able to control the drug consumption without controlling the urge for more drugs. The same goes for people addicted to shopping with borrowed money. Living beyond our means has many repercussions including identity theft and identity fraud arising from increased number of credit lines and frequent sharing of personal information.

The urge for more credit is developed over time just like people don’t get addicted to drugs over night. In our society, we are bombarded with highly sophisticated and targeted advertising and marketing campaigns to create the urge for credit. The urge for credit manifests itself due to constant messages we receive through the Television, newspapers and the Internet. Acquiring credit lines and building credit history is not a bad thing if done properly without the abuse, but it’s extremely difficult to resist the urge for more credit. I was recently offered a credit card that offers 5% rebate on gas and 3% on dining. I jumped on the opportunity since I eat out often and can always save 5% on the high cost of gasoline, but I made sure I canceled one of my other credit cards. It’s very easy to hold on to every thing we got in life and not let go. The 80-20 rule states that we only use 20% of our belongings like our cloths and can easily give away the other 80%. I think the same rule can apply to our credit life. Assess your credit components and keep 20% of all your credit cards and credit lines that provide the most benefits like low interest rate, low APR, great rebates, no hidden fees and detailed statements for improved budgeting, and throw away the rest by following the proper protocols.

Sometimes, we get the urge for credit because we see an opportunity that provides savings and/or rebates. It’s perfectly fine to act and take advantage of the opportunity that is presented to us, but we have to make sure our action is well calculated that takes into consideration the risks of bankruptcy, foreclosure and identity theft. If we carelessly jump on all credit opportunities without making adjustments to other areas of our credit life, we can end up destroying our lives with careless actions that lead to bankruptcies and foreclosures. We have to especially be careful about not abusing loans and credit lines, which are guaranteed by our homes, because if we can’t afford to make the minimum payments for a while, banks can put the house for sale to get their money back. There is no free money.

In order to control your urge for credit, you need to ask yourself a few questions every time you are presented with credit opportunities. Ask yourself:

1. Why do I need more borrowed money?
2. What’s creating this urge for credit?
3. How would this money solve my problems if I have to pay it back anyway plus interest, fees and other borrowing costs?
4. What’s in it for me?
5. What’s in it for the bank?
6. How will I pay it back?
7. What are the risks if I don’t pay the money back?

And remember, more is always less!

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