Have you seen the commercial showing the entire world of people, flowers and animals merrily skipping about until one person writes a check for their purchase? The whole world comes to a dead stop waiting for the consumer to write out a check. The audacity of the consumer to actually slow things down by writing a check. How shocking.
That use to be me as I stood in line with my debit card in hand. Then I saw that commercial and something within me snapped. I realized we are becoming an automated cashless society. So now I sing praise to the poor soul slowing things down as he/she uses a check. And I sing even great praise to those paying with cash. Why?
Years ago we paid for things with greenback almost exclusively. There is a certain degree of pain when a greenback gets broken to lower denominations or worse yet leaves your hands entirely. Checks often times replaced cash and the pain is a whole lot less, but we as a society have had it ingrained within us that there had to be cash in the bank to cover the check.
But then strange phenomena occurred in the 80's. It was the inundation of the credit card -- you didn't need any money in the bank at all. It was completely painless... until the statement came. And for those rare individuals who balked at the idea of credit cards, there was the debit card. It works just like a check only it is more distant than a check and the most amazing part is, it looks just like a credit card. Imagine that! The point of the dry humor above is this. With each step away from cash and towards plastic, the associated emotional pain of handing over money becomes less and less. Like Scarlet in Gone With The Wind, we can "think about it tomorrow."
But most importantly, we not only tend to lose sight of the greenback, but of the greenback's value as well. This may be all well and good for the advertisers and merchandisers, but not necessarily for the consumer when the bills come due and he/she has not a clue how this struggling debt came about.
Many would have you believe that increased spending is good for the economy. That maybe true for political economists. And if so, do we ever do a good job. But what is even better for the economy is increased savings and we as consumers have never done a worse job. Bankruptcies continue to increase which cannot be good for the consumer or merchandiser. Prices continue to rise and we are so grateful with an increased minimum wage, but price increase precedes increased wages -- not sometimes but always! The national debt gets bigger and bigger and consumer net worth gets smaller and smaller.
Consider this. If more consumers slowed down enough to realize the pain of forking over hard earned income, perhaps there would be more savings and less debt. Who knows, we might even teach some politicians the same thing and get our national debt under better control.
Somehow as a society we need to come to grips with the fact that the credit card has absolutely no power. It cannot purchase the smallest item. The only power of the credit card is the money that is behind the card. In other words if you can't afford to pay for it in cash, you can't afford it. Just as the check was nothing more than an IOU, the credit card is also. By postponing paying off a credit card you are selling your future dollar as well as any interest that dollar could earn for you.
Re-read the above sentence. It is the heart and soul of the problem with a cashless society. By eliminating any emotional cost of spending our dollars we are not only saying goodbye to our future wealth but also saying goodbye to any accumulated wealth we might have earned form those dollars being set aside in savings and investment.
I am not saying never buy anything. What I am saying is we need to stop for a moment and realize we have two choices. We can make this purchase or we can take that same money and get it working for us. Your future and that of the family will be based on countless decisions as to whether you want not only this item now but whether you are willing to sacrifice the interest this money could be earning for you.
When we paid in greenback the decision was much easier because there was emotional pain with passing over hard earned money. With plastic, the emotion is much less removed... and that's just how the merchandiser wants it. But what do you and your family want? Do you want the item in front of you by using your card and paying for it with the stolen future wealth? Or do you want the secured wealth itself for your family's future?
Mike has been an Internet Guide/Writer in the field of Credit/Debt Management for over 10 years. His site was awarded Best Of Net by Forbes Publication from 2000 to 2005 with site visitation doubling to over 500,000 average views per month in the last year. He has also offered debt elimination seminars to businesses and community colleges for the last 9 years, and has written for several publications, and has been interviewed on the radio a number of times. Readers will probably be interested to know Mike also offers a free debt elimination mini-course via email. You can enroll at Debt Free In 7.5 Years. Visit his site at LearnCreditManagement.com for more vital information on debt management.© 2009 Mike Killian
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