Bad Attitudes That Can Lead To Financial Ruin

San Diego, CA. "When it comes to saving money, most people will simply stop at nothing." For married couples, the new vow that replaces "until death do us part" is "until DEBT do us part". For the credit card spenders with huge balances the way out is either bankruptcy or trading out their home equity to pay off their credit card debts. These three examples reflect the attitudes held by many American consumers, and especially the younger generations.

The baby boomers are slowly learning that it is their everyday spending decisions, especially the credit based ones, that are negatively affecting their finances as they approach retirement, more so than any investment decision they ever made, if they even invested for retirement.

Jim Garnett, a member of the ICFE's Board of Educational Advisors and the Education Coordinator for Consumer Credit of America, a/k/a Consumer Credit of Des Moines has put together some attitudes that lead to financial ruin.

"There are four attitudes that are very common today. When they merge in one person, financial ruin is not far behind! Here are the four attitudes," says Jim

1. " I WILL TAKE ALL I CAN GET." The average consumer today has access to four times the amount of credit he did just ten short years ago. At the same time, he has less ability to repay it!. This "take all I can get" attitude coupled with this easy access to credit, leads us to borrow more than we need and have higher credit limits than we should. The result is that we always seem to find a way to spend up to our credit limit.

2. "IF I CAN GET IT, I CAN AFFORD IT." This attitude confuses ability and access. We perceive that we can afford whatever we have access to buy. But stop and think, ability implies wealth while access implies debt. Credit affords access to buy, far beyond our ability to buy. I recall the client who was spending 40% of her take home pay on her car payment. When asked how she determined she could afford this car, she replied that the dealer let her stretch the payments over seven years. She then had ACCESS to buy the car, but she still could not AFFORD the car! Because access does not determine ability. Her $24,000 Blazer cost her nearly $48,000!

3. 'IF I CAN GET IT, IT IS A NEED NOT A WANT." To illustrate how this thinking works, just imagine your boss gave you a $1000 bonus tomorrow. You would immediately begin to construct a list of things you need to buy with this $1000. Funny, isn't it, that five minutes before you were told about the bonus money, those needs were just wants. Bewared of this attitude! Once we have access to get something, we usually conclude it is a need, not a want.

4. 'WHOEVER OFFERS ME CREDIT MUST KNOW I CAN REPAY IT." We put our confidence in the person we are borrowing from because we think they are knowledgeable in the world of finance. We trust them to tell us what we can afford. But if their expertise were accurate, we would not see the bankruptcy courts filled with applicants. We must begin to assume responsibility for deciding what we can afford; not leave it to someone else to tell us. We are the ones who will be repaying it, not the person who lends it to us.

If you have a question for Ask Mr. G, please email it to:

For more info contac:

Paul Richard, RFC Executive Director Institute of Consumer Financial Education PO Box 34070 San Diego, CA 92163


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