Thursday, December 20, 2007

Frugal People Don't Buy On Credit

So, how are you at Monopoly? Ever played? Any good at it?

Imagine we change the rules a little bit. Imagine if, when you played Monopoly, every time you passed go, you gave the bank the $200. Not the other players. Just you.

How long do you think you would last in the game playing like that?

Well, using credit cards and other forms of interest is like playing monopoly that way.

Not only are you paying the price for whatever you're buying, but the interest that you're paying on top of the purchase prices is like tossing money away, jacking up the prices of everything you've bought.

Just like in the crazy Monopoly game I described above, people who regularly use credit to make purchases are unnecessarily inflating the prices of everything they buy, tossing a little bit extra away every month that could have gone to other things or been saved.

Saved money earns interest instead of costing it. It's better to know about savings products like CDs, money market accounts, and other savings products than it is to learn about great credit card deals or how to float a balance between cards to keep an interest rate low.

That's like getting the bank to pay you the $200 plus some every time around the board.

Now that would be how to get ahead in Monopoly.

And it's the secret to getting ahead financially in real life.

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