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 we've reached new depths.
It would seem that in this century we've 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 can't
pay?" What do these loan and credit card companies think they're
going to be facing, when the amount of credit and mortgage
they're 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. It's 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 they've 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 can't
afford, with a mortgage we can't afford. Now, that's 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 you're already spending more than
your budget will allow. How about cutting back? Did that ever
occur to the mortgage company? No, because they don't 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 don't spend. You don't want to have to make
the decision between over the limit spending, and a nice, warm
bed.
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