… Is No Credit Card
A few weeks ago, in response to a reporter's query, I suggested that the best credit card for Indie Business owners was no credit card. I explained why. I never heard from her again.
Presumably, her story ran without my input, but that's OK becuase I have a blog so I can tell you what I think myself. I think that the best credit card is one that has a pair of scissors going through the middle of it.
Cash Is King
Cash is King, and if you don't have it, you shouldn't be able to spend it. Sound logical? One would think so, but the credit card issuers have turned this logic on its head. Ever wonder how they can afford those lavish offices, huge executive salaries and flashy advertisements? It's not because we pay the balance off every month. Cash is king, and they want all of ours. I say, "Don't let them have it."
It's Not The Economy, Stupid. It's Us!
They say that the economy is bad. Oh yeah? It's not the economy. It's us.
According to an article at a website with the romantic mission of "bringing consumers and card issuers together," consumer revolving debt was $904 billion as of June 2007, up from $879 billion just 6 months before that. Most families have credit card balances that equal 5% of their annual income, and that doesn't count the compounding interest and late fees.
It's not the economy's fault. It's not even the credit card issuer's fault. It's ours.
We can barely afford to put our kids through college for a year, yet we line up like cattle to beg banking institutions to help us live beyond our means so we can have a 64 inch high definition flat screen TV in time for the Big Game this weekend.
Have You Seen The Commercial?
A few days ago, I saw a commercial. It started with a man watching a sporting event on a tiny TV. His wife finally gives him permission to get a big screen and he goes running off to the electronics store, with credit card in hand. The American instant gratification theme song of "I want it all and I want it now!" plays mindlessly in the background.
I'm thinking it's a big screen TV commercial. But wait! I discover that it's a commercial for Citigroup when the announcer says, "Check your credit card balance whenever you want with the touch of a button."
At the store, the guy slides into a comfortable easy chair in front of the TV of his choice. Can't you just hear him saying:
"Thank God my wife finally came to her senses and I don't have to watch the game on the TV we can afford. I can watch the game on the TV the bank can afford, and I can pay extra for it in the form of the interest they'll collect from me. Even better, I can use my cell phone to call the bank and get an instant indication of how much money they will loan me so I can take this TV home today. Gee, I'm a lucky guy."
Meanwhile, at the home of Citigroup's former CEO Charles Prince III (who retired in November 2007 after the company wrote down millions and millions in debt), they're living on $1,000,000 a year, plus $13,200,000 in bonuses and $258,338 in other perks and miscellaneous goodies, not including the $20 million "severance" that accompanied him out the door. Does he do that because we pay our credit card bills on time? Of course not. He does it because we promise ourselves that we'll pay our bills on time, and then we don't.
The lucky guy at the electronics store is not just a consumer. He's being consumed. The reality is that he can't afford the big screen TV. If he could, the commercial wouldn't have started with him watching TV on a little screen — the screen he could afford.
Soon, reality will set in and the luster of the TV will wear off. Even if his team wins, if he's even a minute late on a payment, he'll get socked with a late fee. If he pays only the minimum balance each month (which the card issuer will encourage him to do by putting "minimum payment due" on the bill) he'll get socked with interest. The result is real Reality TV.
What's Indie Got To Do With It?
Everything. Get out of debt. Don't go into debt. Hate debt. Yes, hate it. How can you build an Indie Business empire when you have to worry all the time about whether you can keep up with your own personal bills? If you need a card to conduct business, pay off the balance every month and keep close tabs on every due date and every fee. Better yet, use a debit card so when you buy something, you buy it with money you already have in the bank.
Freedom does not mean having a lot of money. Freedom is being debt free so you can do a lot with the money you have, even if it's not a lot of money. Yes, cash is king. When you get it, keep it or spend it wisely. Don't give it to the credit card issuers. They already have enough.
Oh, and the reporter who asked for my opinion. She must have ran her story without me because I never heard from her again. It's not a popular train of thought, I know.
What Do You Think?
Am wrong? Too much ranting? I'm just fed up, can you tell? And I don't want to leave my children stranded and helpless in the middle of a bunch of commercials telling them how easy it is to live beyond their means. What are your thoughts? Is it unrealisic to live without credit cards? I cut all mine up so I know it's possible.
Do I have a big screen TV? No. A bunch of fancy furniture? No. But I do have college savings plans for my kids and just about everything else I want and need for daily living. And I sleep at night because I don't have to worry about whether there's some computer out there at 1:00am charging me a $35 late fee because I either forgot to pay, or couldn't pay, my credit card bill on time.
Join me, won't you, in a cash only lifestyle. What do you think?