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Have you ever heard anyone mutter the statement, “credit, what is credit?

” Chances are
probably not. Everyone knows what credit is, duh... But do we really understand it or do
we accept the subjective reality brought forth through our idea of credit? Do we dismiss
all the bad with the idea that credit can bring us everything we have ever wanted in an
instant? Do we personify credit to happiness because like a genie in a bottle, it can
instantly grant us the things we think we need at the time? You tell me...
Growing up, I would frequent my bank to update my accounts. Every. single. time. I
would sit down with someone, I was bombarded with things like: “credit is important, I
see you don’t have any. Would you like to open a credit card? You have to have credit to
do anything later in life. You’re young, it is good to establish this now...” It would almost
drone on to which I would always hold my breath and politely reply; “no, not this time,
maybe later. If I could have my way, I would never open up a credit card. I don’t really
care for credit.”
After high school, I moved out of my mom's house and into a studio apartment. Despite
having previously denied credit cards, I am no exception and ultimately gave in through
the series of events that transpired. I could have put down a huge deposit on the
apartment, but collectively my dad and I decided to have him cosign the apartment. We
agreed that I would save the deposit, being on the lease would build my credit, and I
would get a credit card so I could sign my own stuff in the future instead of just putting
the money upfront.
I went to the bank. Being young and credit-less, I had two credit card options. I settled on
a student credit card with no interest rate. If the payments were made on time, everything
would be just dandy, but if they were made late, the interest rates would shoot through the
roof. At the same time, I had cool perks like points for spending money on gas and
groceries, oh la la.
It was this credit card or another one, a credit card to teach you how to use a credit card:
let me say that again, a credit card to teach you how to use a credit card. You deposit a set
amount of money on to it and that is your limit. Then you use it like a normal credit card
up to your limit making payments each month. The money deposited in the beginning is
not touched unless a payment is missed. If you miss the deadline to pay the bill, instead
of it reporting negatively on your credit statement to the bureau, the user is left with a
small slap on the wrist and the money is taken out of the initial sum deposited.
Smack my ass and call me crazy, but wouldn’t it just be easier to use that money to pay
for whatever you need to pay for and NOT get a credit card in the first place? To me, it
just doesn’t make sense.

“Oh well, whatever, this is necessary,” I told myself. So after having the credit card,
instead of using it to buy the things I needed, I found myself legitimately justifying
buying unnecessary and frivolous things with the mindset that I was “building my credit.”
I still lived within my income by all means, but I truly believed that all this extra
consuming was benefiting me in the long run. Building my credit became something to
do when I was bored instead of something necessary for my future. It was another reason
to consume and become more materialistic instead of saving my money and buying
things outright.
One of my faults, and a fault I believe many Americans have, is the thought that we need
credit: that we need credit like we need air. My mistake as a naive young adult was to buy
into the idea that credit is unavoidable and I am not going to be able to accomplish
anything without credit, and that is just not true. It is something that we are told over and
over again to a point where we start to believe it because credit is subjective, we WANT
to believe it. To you, credit may be getting the car you have always wanted. To me, credit
may be being loaned the money to travel the world. In both scenarios, are we looking at
credit as an idea. It is what we want it to be and it is in that idea that we get lost and lose
our better judgement. Looking at it like that, it is easy to see how people can lose control
in a blissful wind of instant gratification ending up at a point of extreme overconsumption
with unfathomable debt.
Call me crazy, but the statistics don’t lie. People are borrowing now more than ever
before and looking at the bigger picture, it looks as if it is hurting us more than it is
benefiting us.
Here are a few debt stats sourced via Economy Watch:
“The Federal Reserve is looking at $2.4 trillion in unsecured debt. And the numbers just
keep rising...

The total amount of consumer debt in the US is nearly $2.4 trillion in 2010. That’s$7,800
debt per person.
Thirty-three percent of that debt is revolving debt (such as credit card debt), the other 67
percent comes from loans (such as car loans, student loans, mortgages and the like).
”According to the New York Times article “Report: Americans love to lease, borrow
more when they buy,” by Greg Gardner, “the total outstanding balance of all new and
used vehicle loans was $987 billion at the end of last year, up 11% from 2014.”
"The 10th annual report from The Institute for College Access and Success, or
TICAS, showed that over the 10-year period from 2004 to 2014, students' average debt at
graduation rose 56 percent, from $18,550 to $28,950." (USNews)


$51 billion worth of fast food was charged to credit cards in 2006, compared to $33.2
billion the previous year.
Lets add health stats to the debt stats because debt is effecting our health as well.
The average credit card debt per cardholder is $5,100, and expected to increase to $6,500
by the end of the year.
1 in 10 consumers has more than 10 credit cards.
The average consumer carries 4 credit cards. While the average household carries $6,500
of debt.
1 in 50 households carry more than $20,000 in credit card debt. That amounts to more
than 2 million households.
4.5 percent of cardholders are 60 or more days late in their payments.
Roughly 2 – 2.5 million Americans seek the help of a credit counselor each year to avoid
Well, damn America... We seemed to have gotten ourselves in one hell of a pickle with
the consequences--not only negative, but exponential. With all of that information out
there, the only next logical question is:
"Why is America in so much debt?"
Well, according to the Federal Reserve Bank, “40 percent of households simply spend
more than they earn” (Economy Watch).
I could totally be wrong, but to me, that does not sound like people trying to better their
futures by building credit to say, start a business or buy a house, etc. It sounds like blatant
consumerism caused by societal conditioning and IT IS NOT OKAY. Will Smith could
not have said it better: “too many people spend money they haven't earned, to buy things
they don't want, to impress people they don't like.” Everything is backwards (from out to
in not in to out) and it is no wonder why our economy is, excuse my language, going to
If we look at Maslow's Hierarchy of Needs Theory, a pyramid scheme that describes what
he believed was needed to reach self-actualization, we can see Maslow put psychological
needs at the bottom with safety needs right above it. This is what he believed needed to
be the base to further progress up the pyramid. Within these sections of the pyramid, you
have things like shelter, food, clothing, personal security, financial security, health and
well being (Wiki). You don't have to fully accept this theory to understand his idea, that if
you are healthy and have means to provide for yourself, you can progress and build a
fulfilling and happy life. How I see it, is that through this idea of outside to inside, of
consumerism, instant gratification, and living outside of one's means via credit,
individuals are unknowingly taking away the security of the bottom two levels causing
the pyramid to break apart and tumble in all directions. By not learning how to deal with
credit properly and going into unmanageable debt, we are retroactively breaking away the
foundations that allow us to flourish and succeed in life and the foundations that further
allows our society to develop and progress.

Credit is good when it is good, but when it is bad, it is catastrophic. Using an excessive
amount of credit is like walking a tight rope on top of a tall building with no safety net to
catch your fall. Sure, you might be able to keep cautiously walking forward and making
your payments on time, but what happens when there is wind or in reality you lose your
job, have an emergency, or there is a disaster? Being that credit was the answer from the
beginning, what is left? Clearly no savings because you would of used it if you had it...
You can only go into so much debt before it comes back with a vengeance. Not only will
debt take everything you have at the current moment, it will take everything you can
have, putting a prolonged hold on future endeavors: garnishing wages after declaring
bankruptcy is definitely a thing. Credit and debt are unrelenting, hard, and cold because
at the end of the day, it's not personal, it's just business.
I don't want to give you stats and analogies anymore: I want you to honestly ask
yourselves these questions and just think about it...
In the last decade:
How open are the people you know about discussing debt?
How many houses have you seen foreclosed?
What is happening with the job market?
How many people do you know that have paid off their property to its entirety?
Has health declined and are people able to pay for their medical bills?
How much more do you think the national debt will rise?
How many more people are relying on social security, food stamps (etc.)?
We have to think about it, talk about it, and as difficult and awkward as these
conversations might be, share information in an effort to brainstorm and ultimately
overcome these problems.
You have to understand banks are businesses too, and they make money off of YOU. You
have to educate yourself about money and learn about credit because a few missteps will
take everything you have, leaving you crying on the side of the road, penny less, and in a
whirlwind of self pity.
I truly believe that and what makes me even angrier is that people don't care. At the same
time, it infuriates me that those who can't see it, due to lack of education or proper
financial guidance, are buying into the idea that they are bettering themselves via
"establishing credit," but instead are shackling and indebting themselves, relinquishing
their freedoms with each credit card swipe.
I read somewhere a while ago that the gap between the socioeconomic classes is growing
and I have no doubt in my mind that is true. As a nation, we are nailing our feet to the
floor, renouncing our assets ,and literally digging the gap ourselves while we point

fingers at the other side. I want to stop it, so here I am preaching: we need to help each
other and we need to learn from each other before it is too late.
I am not saying I have all the answers by any means or that I am an accountant, and I am
not saying I am exempt from debt: I have my share of student loans and I have a single
credit card. I AM saying that I realize I am extremely lucky to have figured out early on
that credit isn't everything and to keep it at bay as best as I can. What I AM saying is that
I understand that not everyone has this luxury and there is no reason for one person to
have to go through it just because he or she simply did not learn about money. I AM
saying it is okay to talk about credit, debt, savings, and investing in an effort to learn and
educate ourselves. I AM saying that I truly believe that by talking about things that
matter, we can make a difference and that by collaborating, we can brainstorm a solution.
No one thinks it will happen to them until it does, and when it does, everyone wonders
what they could have done to prevent it, stop it, or change it. So why not at least TRY to
help be a part of finding the solution instead of remaining oblivious.
So How Do We Fix It?
Like I said, I do not have all of the answers nor am I an accountant, but I think a place we
could start is by actively attempting to shift our thinking from consuming and
overspending to saving and investing.
Instead of learning how to spend money and build credit, we need to teach the youth how
to save and invest at a younger age: we need to bring back the VALUE of money. The
younger we start to teach the youth this fact, the less we are going to have to borrow
money in the long run - because the money will be available to go to school, the money
will be available to buy a car, house, etc. People will grow up with a greater appreciation
and understanding on what money is because it is theirs and they won't just throw it
Two ways we can start to do that is by discussing compounding interest and an
intermittent cash only lifestyle.
The cash only lifestyle is easy and pretty self explanatory. By going on spurts of only
spending cash, it shows you a few things. It shows you not only where your money is
going, but also that once it is gone, it is gone. There is no going into the negative, there is
no overdraft fees, etc. It makes you reconsider spending your money because you
physically see it and you physically see HOW MUCH you are spending. It reminds you
of how to spend your money and to truly be cautious of your means and HOW you want
to live within them. This is the exact opposite of a debit or credit card where you swipe it
and deal with the balance and consequences later.
Now, if adopting a cash only lifestyle from time to time will remind you to stay within
your means and show you the value of money, compounding interest is the icing on the
cake. Compounding interest can show you how your money will make money and how

that growth is exponential and the earlier you start, the better. This is the exact way that
creditors make money off of interest and ho to shift the perspective to savings. Here is a
graph that Business Insider demonstrates the compounding interest:
In this graph, it shows that the earlier you begin to save, the more your money makes
money via compounding interest. Your interest brings your balance up, which then makes
more interest and that new balance makes more interest than before. You can see in the
graph that the person who started investing the earliest, and with the least amount of
money, will walk away with the most money in the end...
In this graph, it is applied to retirement; what if instead of retirement, we applied this
aspect of slowly compounding a positive interest, to a children's savings accounts. By the
time they become adults, would they even need credit? From the time the account is
created to when the child grows up, we can use this time to slowly teach and educate
them on the process of his or her account. If I start investing money when I am in my
twenties and by my fifties can have a pretty penny, what will happen if I start when my
child is young and have them start to contribute as they get older and can start to work?
Good things, I could only imagine....
Here is where that graph is from and a great article, which I highly, highly, highly,
HIGHLY suggest you read. (Business Insider: Compounding Interest)

Here is one more video which basically sums up either someone taking your money or
you deciding to take the right path and have your money make money...
What will you decide? I encourage and urge you to join the discussion on credit and debt.
I alone can not fix the problem but together we can. Together we can start to make a
Join the Campaign and share you solution.
-Your Girl Em :)