Using Credit - Using Credit Wisely

Using Credit - Using Credit Wisely

How to Use Credit Wisely

If you plan on getting credit and using it you must learn to use it wisely or you will find yourself in a whole lot of financial trouble.

When you start to understand all there is to know

about credit including how to use credit and how

credit works, you will be better off when it comes

to handling your personal finances.

There are so many people that believe you shouldn't

use credit at all. I disagree.

I think using credit is a very good way to show that you

can manage your money. Just know that once you

establish credit you are under a contract that states

that you will pay as agreed.

Why Some Will Use Credit

For some, using credit will be their only option when it comes to purchasing a car or buying a house. It is very unlikely that most peoople will pay cash for everything they purchase.

However you should not use credit unless you first think it through.

Ask Yourself These Questions Before You Use Credit

Is using credit at this time in my life a wise decision?

Can I afford to make the monthly payments even if I loss a job?

Am I considering another income to help me make the payment?

How much credit should I use?

What kind of credit should I use?

Will it increase or reduce my networth?

How long will it take to pay off the credit?

How much interest will I have paid over the period of the credit?

Will it increase or decrease my credit score?

If you are really serious about keeping more of your money you will ask yourself those questions before you use any credit.

List of Credits You Can Apply For or May Already Have

Credit Cards

Mortgages

Home Equity Loans

Student Loans

Finance Loans

Now take a look at the above credits, which one do you think causes the most financial problems in peoples lives. I would say it Credit Cards. Here's why. Lets say you financed a $100,000 house.

You have a 30 year fixed rate mortgage meaning your payment remains the same for 30 years or until you pay it off. Say your monthly mortgage is $750 and that including your interest.

At the end of the 30 years you will have paid around $270,000 for your house. The good news is owning a house increases your assets.

In comparison

Say you have a credit card @ 21% interest and a credit limit of $10,000. Although you don't have a time limit to pay for the credit card, it can take you around 30 years to pay for that credit card too. Especially if

you continue to purchase things with it.

Plus using a credit card brings very little value if any to you. Well unless you bought something that increase in value.

Use this calculator to figure out your credit and how long will it take you to get out of debt.

Credit cards are a very serious issue and should be used with caution.

Therefore I 'm going to do a Credit Card Tutorial.

I do have a Mortgage Tutorial for those of you that would like to learn about mortgages.

Click Next Page to Start Credit Card Tutorial