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Money for sale! Get it while it’s hot!

Banks and lenders are offering to sell us money everywhere – and they are telling us it’s cheap!

The marketing around selling debt is more prevalent than ever before. Try turning on the TV or driving down the road without hearing an ad or seeing an billboard for a debt product – you’ll never make it.

Banks sell money

It’s not surprising that banks sell money. I can actually appreciate that they are willing to fork over hundreds of thousands of dollars to allow us to buy a house. While I can’t classify any debt as being a “good debt”, a reasonable mortgage is the only financing we will ever have.

Banks also sell credit cards

Why are there so many banks selling their brand of credit card? Because it is profitable

Think about it: You use their plastic to buy a $600 TV and promise to send them $600.00 back within 30 days. If you do then you have been able to use OPM (Other People’s Money). In this situation the credit card company only make between $12.00 to $24.00 on transaction fees they charge to the retailer for processing the payment.

Credit cards cost us lots of money

Interest payments are what makes mega-banks the most money. In our example of a $600.00 TV purchase, if you don’t pay the entire balance back within 30 days – an experience many Americans with revolving credit are all too familiar with – then you will have the opportunity to pay the bank $6.00 or so every month in interest charges and they still get the money charged to the retailer for processing your credit card. Tag on over-the-limit fees, late fees, and other charges and you quickly understand why they operate out of the biggest buildings in the city.

Most people promise they will pay their credit card balances off every month. I know from experience that it is rare that a person will NEVER pay interest or some kind of fee. If they avoided it then they are disciplined enough to not even need a credit card.

Additional costs behind the money for sale

Have you ever had this happen to you: Have you forgotten to make a payment? Back when we had credit cards I filed my wife’s card statement in the bill box and kept telling myself “I’ll get to it later”. The day before it was due I realized I hadn’t mailed it in yet.

I rushed to the nearest Office Depot and overnighted the check. Expedited shipping isn’t free, and it put us back about $16.00. Guess what, it didn’t get cashed in time so we were dinged with another $25.00 in late-payment fees.

All my wife’s savings from frugal shopping that month were washed away in $41.00 worth of stupidity!

Banks are not the only ones that have money for sale

I can understand the SBA offering business loans. I can also understand why car dealers sell financing for their cars. You don’t really think they can operate on the little bit they make by selling you that SUV for $500 over invoice, do you?

However, Southwest Airlines, Home Depot, and Victoria’s Secret sell credit cards. Seriously, these are huge entities that were built on good service, one-stop shopping for home repair, and really awesome underwear for my wife (respectively and respectfully). What business do these companies have in selling me a credit card with their logo on it?

[stextbox id=”TweetMe” bgcolor=”eaeaeb” cbgcolor=”09f5f0″ bgcolorto=”89cff9″]What business does Southwest Airlines, Home Depot, and Victoria’s Secret have selling us credit cards? (Click to Tweet this)[/stextbox]

I’m waiting for the day when PetCo gets into the credit card business. The goldfish will die long before the credit card statement even hits the mailbox!

The worst money for sale deals

It gets even worse with certain markets that have been classified as either a “much needed service” or somehow are classified as “entertainment”. I don’t have a problem paying money for entertainment – it’s the promise that we are supposed to benefit financially from it in some way that makes me want to scream.

• PayDay loans – a “needed service for the un-banked.” If it were a needed service then the government would have voted in a program for this profitable sector – politicians need the good publicity and the votes!
• Casinos – Entertainment. Right. And the removal of the loss-limit for gambling in Missouri helped more people than damage relationships when spouses were “just having a little fun and things just got away” from them at Harrah’s.
• Lotteries and Scratchers – I have a nephew that once told me “If you don’t play, you can’t win”. I responded “If I don’t play then I get to keep my dollar”.

Don’t fall for the “cheap money” trap

The commercial says “Life takes Visa”. I disagree – I think debt steals it! Pay off all your debts one-by-one and start saving for your future. You will find security and comfort in knowing that little bumps in the road can be taken care of by a healthy emergency fund, not your Master Card.

You can live in the United States with No Debt and No Credit Cards and become rich. You don’t need a car loan to get to work, you just need a car. You don’t need a credit card to buy things, you can use cash or a debit card. If you plan to lose $500 at a casino then why not have dinner at Ruth’s Chris and take in a show – or two! The Playbill from Wicked will bring back much fonder memories than the discarded scratcher or headache from pings, bells, and flashing lights while facing a one-armed bandit for three hours.

[stextbox id=”twitter”]Borrowed money is cheap but nothing is cheaper than paying for things with cash. It’s the best deal out there that nobody is selling you (Click to Tweet)[/stextbox]

If you are looking for a proven way to eliminate your debt for good and getting your life back then why not call a Financial Coach? I offer free 30 minute consultations to see if it really is too late for you and find alternatives to getting out of the mess that the debt collectors will never tell you.