ACCORDING to a recent study, a majority of people in this country are living way beyond their means. In keeping up with the Jones’s, these people have resorted to using credit cards to buy things that they normally can’t afford with their income. They buy everything with the plastic cards they keep in their wallets. It’s the familiar “Vegas mentality” that if you are using chips, it doesn’t even feel like real money.
As a bankruptcy attorney, I am often shocked to see that a lot of people use more than half of their take-home income just to be able to make the minimum payments on their credit cards each month. Now, in the eyes of the world, these people seem to be doing fine financially. Some people may even be misled into thinking that they are “wealthy”. They have nice homes, nice cars and the latest toys or gadgets that everyone else has. But if you look at their finances, it is evident that they have stretched themselves too thin.
The truth of the matter is that these people are not even close to the real definition of being “wealthy”- They simply have a “high-consumption” lifestyle. Everything they have is “owned” by the bank that financed the purchase. The moment they lose the ability to make payments, they could lose everything overnight. Their current lifestyle has become a “disaster waiting to happen.”
Wake up and smell the coffee. If you have to borrow money from a bank to buy something, that thing is not YOURS until you have made all your payments. Someone said that if you are living in a mortgaged house, driving a mortgaged car, sleep in a mortgaged bed and keep your food in a mortgaged refrigerator, you have practically mortgaged yourself and your life to your creditors!
Remember this: Wealth is not what you spend or borrow, it’s what you accumulate. Having a lot of things in your life- be it a house, a car, nice appliances, etc- doesn’t mean anything if you do not own them. The things that you truly own are your assets. The things that you can only afford if you get a bank to finance the purchase are nothing but a liability. And in most cases, the collateral depreciates more quickly than you are able to pay off the debt.
According to a recent research, the average credit card debt of U.S. households with at least one credit card was $9,205 in 2003, up from only $2996 in 1990. That’s a 310% increase! What is the reason for our propensity in using those little plastic cards? Sure, it’s nice to eat at those fine restaurants and buy all the latest gadgets and toys that other people have- as long as you can afford to pay the bill when you get your next monthly statement. But as I stated above, using credit cards to finance these luxuries is a long-term loser if most of the stuff you buy with your credit cards depreciates rather than rises in value. To add fuel to the fire, consider the outrageous interest that the credit card companies are charging you every month. On a $2750 credit card balance with an 18% APR interest rate, it would take you 15 years to pay off this debt making minimum monthly payments.
If you are experiencing serious debt problems and don’t know where to turn for help, call our office so we can help you determine whether Bankruptcy is right for your situation. In some cases, filing for bankruptcy or debt consolidation may be the answer. In some cases, it may not be. For more information and to schedule a free consultation, please call Toll-Free 1-866-477-7772. Let us evaluate your situation and recommend possible options. We have offices in Glendale, Cerritos and Valencia. n
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped thousands of clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1 (866) 477-7772.
