Ten Perspectives That
Will Sink Your Financial Ship
by Jim Garnett, aka the ICFE's Ask Mr.G.
Our perception determines our practice, our belief results in
our behavior, and our attitudes result in our actions. This is
true in all levels of life, but especially so in the area of
finances. The way we view our finances will determine the way we
do our finances!
Therefore, my goal is to challenge and change many of the
financial perspectives that are prevalent in today's society.
Because each perspective covers such a vast array of specific
situations, it does not take many faulty perspectives to sink
one's financial ship! I've listed a few below!
1. "Credit cards are money." This perspective is
understandable because both money and credit can buy things. But
buying with credit creates debt; each credit card transaction is
like taking out a loan at the bank.
2. "If I have access to buy it, I can afford to buy it."
. Easy credit determines what we have access to buy; real money
determines what we can afford to buy.
3. "They would not give me credit unless they knew I could
repay it." We cannot trust the salesman to tell us what we
can repay. The frequent bankruptcies and foreclosures would tell
us that many lenders must be guessing wrong when it comes to who
can repay what.
4. "Just tell me the minimum payment." I think of the
single mother who thought she bought a new Blazer for $24,000,
when in reality she paid almost $48,000. "So that I could afford
it, they let me buy it over 7 years instead of the normal five",
she said. Ouch!
5. "I don't need a savings account; I have my credit
cards." Paying for emergencies with credit often creates
another crisis down the road - like when the credit bill is due.
6. "Debt is ok, as long as the interest is tax deductible."
I, for one, would rather not have debt than have a tax deduction
for a percentage of the debt. I would rather generate tax
deductions by giving to needy charities and organizations.
7. "I don't have any wants, just needs." If we were
given $500 unexpectedly, most of us would immediately construct
a list of things we need to buy with that money. Isn't it
interesting that five minutes before we knew about the $500
gift, all the things on our "needs list" were just "wants"? Be
careful - our wants become needs once we have access to get
8. "I can use the equity in my house to pay off credit
card debt, go on vacation, or have extra spending money."
This practice of using our homes like an ATM machine accounts
for 14% of today's 64 year olds facing retirement with negative
net worth. Our homes are normally 60% of our net worth - that is
unless we have two mortgages on it!
9. "I am paying my bills on time so I must be financially
healthy." Credit creates the illusion that we are staying
afloat because we are swimming when in essence we are simply
holding on to the side of the credit lifeboat!
10. "Having good credit is the most important thing to me."
Good credit is important but it basically allows us to go into
debt with good terms. Maybe we should consider that going into
debt is not good, regardless of the terms.
Copyright ' 2008. Jim Garnett
AskMrG Financial Library
2216 SW 35th Street
Ankeny, IA 50023
About the ICFE:
The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation). The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely.
The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and Resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.
The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org). CASDRAP disbanded in 2010, shortly after the web site project was completed. In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.
The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.
Visit the ICFE's other web sites at: www.financial-education-icfe.org and studentdebthelp.org. Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G, a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.