ICFE eNEWS #15-31 - Oct 29th 2015
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Credit - The Great Illusion
By Jim Garnett, a/k/a Ask Mr.G, a member of the ICFE's Board of Educational Advisors
Of all the great things that credit does for us, there is something even
greater that credit does to us! Credit creates an illusion.
Let me illustrate. Years ago a retired gentleman came into my office
for financial counseling. As he was seated he said, “I do not
have any financial problems. I am current on all my bills. I have a
high credit score, and I can get a loan from any bank in the city. I am
just having trouble paying off my credit card debt!” And with
that, he produced 54 credit cards with over $227,000 worth of credit
card debt! True story!
His debt had accumulated rather quickly (I suspected from the casino),
and he had already borrowed against his home a second time to try to win
back his losses. Seeing his monthly income, I knew he must be presently
using his credit cards to the tune of $5000 per month if he was staying
current on his bills.
I casually asked him, "Are you still using your credit cards?" He
answered, "Yes, but not like I used to." That's like asking a man, "Are
you still kicking your dog?" and he replies, "Yes, but not like I used
to!" Not a good answer, but it shows the part that perspective can play
in allowing us to look at things realistically - or not.
Credit had done to him what it does well; it had created an illusion!
Because he was current on his bills, had a good credit score, and could
go out and get more credit, he was deceived into thinking he was
financially healthy. In his perspective, he had debt, but he was
Although more extreme, this man represents many Americans who have also
been deceived by a constant use of credit. They measure their financial
health with false indicators and see themselves better off financially
than they actually are. They are like a person who determines his
appearance by looking in a fun house mirror.
You see, being current on bills, having a good credit score, and being
able to borrow more are not necessarily accurate indicators of our
financial health. We must look below the surface and ask, “How am
I accomplishing these things? Is it because I have enough real money to
pay my bills, or is it because I use credit to make up the monthly
To tell the difference, put all your credit cards in a drawer for two
months and see how hard it is to pay your bills. If you run out of
money before you run out of month, you are probably spending more than
you earn. You must then decide to either make more or spend less.
Continuing to use credit like a “lifeboat” is not a good
alternative. Eventually, the “lifeboat” will sail into the
horizon, and we will “sink” financially!
Credit can enhance our lives for the good, but it can also ensnare us by
creating an illusion and hiding the reality of our true financial
© Jim Garnett, The Debt Doctor
AskMrG Consulting, LLC
2216 SW 35th Street
Ankeny, IA 50023
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