“Historically, when one party controls both houses of Congress and the White House, the deficit goes up,” says William Gale, a senior fellow at the Brookings Institution. “You’ve got your hands in the cookie jar.”
I rather amazes me how some people can run up these huge debts so quickly on credit cards through frivolous shopping. Some people are given the privilege and convenience of using a credit card only to get caught up in consumerism and outspend their ability to repay.
I have gotten offers frequently for credit cards throughout college, but those quickly ended up in the recycling bin. I felt credit cards where a waste of money and an unnecessary temptation that I did not want in my life. Yet, as I have grown older my opinion on these seemingly endless source of credit for people has changed.
I now see having a credit card as an important way to build credit by using the card for small purchases. I did not borrow any money for college so I have essentially no credit score and it’s something I want to build so some day I can have the money to buy land and money to build a farm.
Recently, I went searching for a credit card online and shifting through the variety of offers. Unfortunately, I found that the number of offers I could get where quite limited, with a limited credit history. The cards with good perks where either declined for me or required a yearly fee. It turns out that nowadays getting a credit card has gotten more difficult.
Ultimately, I settled on a very basic Capital One card, the one that’s so heavy advertised to college students including myself. It was free to get and use as long as you pay the balance back right away. The ceiling on the card was very low, but that’s fine for me. I don’t plan to use my card to finance anything expensive — it simply is a tool for me to build credit.
There is one additional benefit to having a credit card. It’s great for limited emergencies, when you run upon a situation where you need more money then is directly available in your bank account. When I have my card I will very rarely use it for this purpose. I believe a credit card should only be used for emergencies until you can get the funds from a savings account or other guaranteed place that ensures that it’s paid off as soon as possible.
It horrifies me to see how some people use credit cards for thoughtless consumption. Yet, I realize there are many legitimate uses of credit cards to build credit scores and bona fide emergencies. I believe that with restraint, that’s often so lacking in our society, credit cards are a good thing.
One of the most concerning news stories of recent weeks is our low national savings rate. Last year it was a negative 1.6%. The previous year it was negative 1%. This year’s rate is the lowest in over 70 years.
For most Americans, that’s just another financial figure that goes in one ear and out the other. For some it’s not surprising, as they know first hand the impact of our mounting debt on their finances. They know what it feels like to be beholden to the bank.
Yet, for those who have a real understanding of this figure it’s pretty scary. It means we are spending more then we have money coming in. And a lot of that debt is not going to things that are improving us or building our country. It’s one thing to be borrowing money to get an education or buy an house or pickup truck, it’s another to buying more toys then you really need.
There is a lot of evidence that we are buying more toys then we need. We are too often sold consumerism and become blind to our own means or the costs of our consumption. Indeed, the personal financial transaction is minor compared to all the stuff we are amassing as individuals.
All those material possessions had to come from somewhere. They involved the exploitation of some material whether close or far away from us. They may have or may not have brought money into the local community. More likely then not, these days, they didn’t. And then they have to go somewhere.
There is no problem with making investments into the future. Likewise, there is no problem with purchasing material goods. But we need to be reasonable at what we buy and realize that there is only so much we really need. We need to focus more on ourselves and our communities, and stop buying things.