Here is an example of the system gone wrong: a mortgage loan that encourages paying off one debt, in order to over extend yourself with another debt. This is what happens with the interest only loan and credit card debt. As a borrowing nation, I believe weve reached new depths.
It would seem that in this century weve managed to take every form of credit possible, extend it to the limit for some of the public, and then look at them as if to say, You mean you cant pay? What do these loan and credit card companies think theyre going to be facing, when the amount of credit and mortgage theyre willing to extend, reaches beyond the acceptable debt to income ratios? Why do they think these were established in the first place?
More consumers than ever before owe credit card debt. Its the way to go, many college campus are overrun with representatives from the major credit card companies, eager to extend credit to the young fresh hands of the college student. Are they as ready to work with them when theyve over extended themselves? No. What about the rest of the spending public? How do they handle their credit card debt? Well, thanks to the interest only loan, we can now pay off credit card debt we cant afford, with a mortgage we cant afford. Now, thats progressive thinking.
The interest only loan is now a tool for replacing non-deductible over extended debt, with tax deductible over extended debt, and the consumer continues to be the one to pay. This is not a wise option, if youre already spending more than your budget will allow. How about cutting back? Did that ever occur to the mortgage company? No, because they dont make any money off of the fact that you spend less.
As a fellow consumer, each of us should take the time to question our spending. Is it wise? Is it necessary? If the answer to either question is no, then dont spend. You dont want to have to make the decision between over the limit spending, and a nice, warm bed.
It would seem that in this century weve managed to take every form of credit possible, extend it to the limit for some of the public, and then look at them as if to say, You mean you cant pay? What do these loan and credit card companies think theyre going to be facing, when the amount of credit and mortgage theyre willing to extend, reaches beyond the acceptable debt to income ratios? Why do they think these were established in the first place?
More consumers than ever before owe credit card debt. Its the way to go, many college campus are overrun with representatives from the major credit card companies, eager to extend credit to the young fresh hands of the college student. Are they as ready to work with them when theyve over extended themselves? No. What about the rest of the spending public? How do they handle their credit card debt? Well, thanks to the interest only loan, we can now pay off credit card debt we cant afford, with a mortgage we cant afford. Now, thats progressive thinking.
The interest only loan is now a tool for replacing non-deductible over extended debt, with tax deductible over extended debt, and the consumer continues to be the one to pay. This is not a wise option, if youre already spending more than your budget will allow. How about cutting back? Did that ever occur to the mortgage company? No, because they dont make any money off of the fact that you spend less.
As a fellow consumer, each of us should take the time to question our spending. Is it wise? Is it necessary? If the answer to either question is no, then dont spend. You dont want to have to make the decision between over the limit spending, and a nice, warm bed.
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