Bad Credit - Pay Now Or Really Pay Later

by : Erol Orderland

Most people live in a 2-income household, just to make ends meet. Whether paying rent or signed up for a 30-year mortgage, simply keeping a roof overhead can be a challenge. Add the rising costs of food, clothing, utilities, and fuel, and the budget is pretty tight.
Now, include the additional expenses related to having children and pets, and the majority of people are one paycheck away for imminent disaster. Unfortunately, a growing population has first-hand knowledge of pay now, or really pay later. Bad credit permeates life at the personal, professional, and economical levels.

Bad credit can adversely affect personal relationships. Today, the divorce rate in North America is at least 50%. When the going gets tough, lots of people pack up and leave. Bad credit is definitely tough. Money issues are the source of many domestic squabbles. Unless a couple has the same economic goals, and a mutual plan of achievement, relationships suffer.

For example, one partner may be a penny pincher and have no trouble cutting the budget to avoid bad credit. Conversely, the other person has trouble keeping cash in the pocket, paying the bills first, and saying "no" to wants, even though the financial obligations have not been met.

The penny pincher is worried about losing good credit standing; the free spender has adopted the philosophy of "don't worry; be happy!" Nevertheless, bad credit is only a paycheck away.

When bill collectors start calling, disconnect notices come in the mail, and the personal credit score is in the toilet, the disagreements begin; the stress level escalates; and, personal life matches the plummeting financial situation. Many people will actually separate or get divorced over bad credit problems.

Individuals with bad credit often suffer professionally, as well as personally. For example, contractors, by necessity, need a line of credit at the local lumberyard or hardware store.

When the job is complete, and the customer pays, the bills for the materials are settled. However, if the contractor has a bad credit standing with other local businesses, he/she will not have the necessary funds to buy the necessary supplies for a project.

Likewise, a business may have difficulty getting a loan for renovations or expansion. Instead of having the money to help the business grow and become more competitive, opportunities for increasing profits will slide by and go to a competitor, simply because bad credit negatively influences requests for the necessary funds.

Generally, businesspersons with bad credit will soon become unemployed. To be a successful entrepreneur, knowing how to manage money and maximize potential is extremely important. Without the ability to spend and save wisely, the profit margin will be slimmer, with little resources for improving economic stability.

Economic stability is essential for a happy and productive existence. People caught in the cycle of bad credit are under constant stress and a cloud of discouragement. No, a person does not have to have a 6-figure income be free of financial stress, although the money would be nice.

However, knowing the bills can be paid every month, and building a nest egg for the future is a comforting. Conversely, bad credit, for many families, means they are one house payment away from foreclosure. Utility deposits are usually higher, and retained longer, to offset the strong possibility an individual with questionable financial stability will fail to pay a bill. Also, unpaid loans (credit card bills) frequently have penalties or exceedingly high interest added, only making financial difficulties increasingly miserable.

Bad credit is much like dominoes. Consider the contests to see who can build the most intricate maze or picture, using upright dominos. After hours of intense concentration and hard work, the lead domino is tapped to fall into the adjacent game piece. If the individual displayed the creation correctly, the dominos should fall in one continuous string, until all the little blocks are flattened and the basic design can still be detected.

So, how are the two similar? The first domino is like the first incident of bad credit. Unless an individual can keep the troubling economic situation from getting worse, one problem will lead to another, then another, and before one really knows what is happening, loans are impossible to obtain, forget buying on credit, writing checks may even be taboo for many purchases, lenders are threatening to foreclose, and the car is liable to be towed out of the driveway. Ouch!

In summary, risking bad credit is not worth the ultimate price an individual will have to pay. If one does not pay now, the cost may be the loss of personal relationships, the inability to succeed professionally and financially, and the economic restrictions prohibiting the purchase and retention of the basic necessities of life. Simply put: pay now, or really pay later.