#123 Credit Cards are not free money

Now here’s something they did not teach me in school.

I’m hoping our current financial crisis may have sorted itself out a little, Lottie, by the time you’re old enough to need to worry about money.  Maybe, maybe not.  We’ve recently had a credit crunch, which is sort of where the previous generation borrowed too much money and couldn’t pay it all back, which meant that suddenly a few years ago there was no money left anywhere, everything got really expensive and a lot of people got broke.  That’s the jist anyway, still not sure I 100% understand the ins and outs.

Here’s the thing, there are ways of getting cash, but several of them are bad ideas.  The truth is, there is no such thing as free money.  The best kind of money comes from working, because then it really is yours, no ifs, no buts, no small print.  Overdrafts are a good thing to have, they can tide you over and bridge that gap that often comes at the end of month, currently a lot of overdrafts are interest free, so as long as you keep an eye on these and don’t spend over the agreed amount, you should be okay.

Try to avoid money lending websites, the interest is colossal. Definitely don’t ever organise a private loan agreement with a stranger / through a private loans company.  I once saw someone get punched by a bad guy on Neighbours because they borrowed from a loan shark – yet again soaps filling in the education gaps that school left behind, huzzah!

Credit cards.  I have one, I use it.  There is a minimum you have to pay off each month to stop you getting charged loads.  At least ensure you can pay off the minimum, but try to pay off the full amount every payday (easier said than done, trust me, I NEVER manage this), but if you can, then do!  The interest on credit cards can be huge if you don’t keep up your payments.

Bank loans, are another thing I would avoid, unless you have a good salary and steady income and have a plan to pay them off.

My general rule is don’t spend more than you can earn.  I flout this one all of the time, but by being conscious of it, I don’t flout it quite as badly as I would if I wasn’t conscious of it.

Remember mortgages, student loans, credit cards, private and bank loans will all need paying back at some point, so only enter in to them if you have a plan of how you may pay off those debts.  I’m not saying there aren’t times when you won’t need any of these as a fall back, just go in with your eyes wide open and a plan.  There’s no such thing as free money.

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