Tuesday, July 8, 2008

Financial Culture and Compound Interest (2)...

Let's talk now a bit about the "darker" side of compounding interest... In a shaky economy where many jobs are being lost and global financial markets are also feeling the "pinch", well, assuming that our severance is running low and we must pay the bills (those never cease to exist...) and looking after our families, as long as we could manage to prepare a budget and analyze as carefully as possible if we could pay those urgent debts (the "dreadful" credit card), we could relax just a bit but... if we don't find a new source of income, How long we can "survive"?

If we could cut our credit cards in pieces after paying those debts... How long we could manage our personal / family well-being if money runs low? Many people could have no other choice... Using the credit card to fund their needs can be an immediate alternative but if we think about the "worst case scenario", if we are unable to make regular installments, we would see a soaring debt because of the same compounding interest and the problem will be there... our credit record will be there "haunting" us.

If there's no other choice, we should try to use credit wisely. Let's consider a basic financial strategy:
how to manage our debt and credit. Time to study and learn...

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