The Number One Credit Card Mistake

I saw a statistic somewhere about the fact the nationwide savings average is actually in the negative if you include nationwide numbers for debt. More people are in bigger debt today than have anything to speak of saved for that rainy day.

It's more than just a little disturbing if you realize that even the 20% of people who have 80% of the world's wealth can't compensate for all the people in debt. Apparently, we have a great big spending problem.

...and it all centers around one horribly wrong belief with credit cards.

As a financial advisor, 99% of the people I helped were all in some sort of credit card debt. When I asked them what assets they bought with their credit card, they just looked at me like I had three eyes.

Chew on this for a moment. When you buy a house, you get a loan. You're buying something that appreciates in value, with a loan that – hopefully – grows in cost slower than the house grows in value.

Why aren't you thinking the same way with your credit card? It's the same concept, except you're buying at a much higher interest rate. If anything, you should be even more focused on making sure that anything you buy on credit will appreciate in value even faster than that interest rate.

Do yourself a favor and stop buying gas, clothes, and whatever other shiny worthless object that catches your eye on your credit card. Limit yourself to buying things that increase in value or will return value – like marketing, advertising, education, software, stocks, and material assets.

By the way, cars aren't assets. Just think about it for 3 seconds.

Cars lose at least 40% of their value as soon as you drive it off the lot. They're just really expensive money pits – unless it's a classic.