Making Good Decisions About Debt

What if you want to go on vacation?  Do you really want to spend the next 10 years paying off that vacation?  No. It is generally unwise to go into debt to pay for a vacation. It is much better to make payments to a vacation savings account and then go on vacation, than it is to take a vacation and then make payments to a credit card company. Two things happen when a consumer borrows money to pay for a vacation. First, once the vacation is over, money can’t be saved for the next vacation since the consumer is still paying for the first vacation. Secondly, making payments to a credit card company increases the cost of the vacation (because of the added interest payments) and that makes it more difficult to take a second vacation. 

Think About It

What if your friends all have the new video game system and they want you to buy one as well?  Do you think it’s better to wait to save up the money to purchase it, or charge it to your credit card? 

Remember, if you are financing items (buying them on credit) just to keep up with your friends or to show off, it’s not worth it. Your financial well-being is more important than being known as the person who has the newest tech toys. Peer pressure can end in bad debt. Each person has his/her own budget; stick to your budget and only purchase those items you can afford!