SPENDING FUTURE INCOME 1

Credit cards enable you to spend future cashflow, income that you haven’t earned yet but expect to earn with some certainty (e.g., regular paying job, income from own business, etc).

Credit cards are temptations to live beyond your means. You are living within your means if you are able to pay off the entire balance in your monthly bill. This is the best position for you. You are, in effect, getting a 30-day loan from the credit card company interest-free.

If you are not able to pay off your entire balance and this balance grows from month to month, from bill to bill, you are clearly living beyond your means and should re-think your spending habits.

image from Microsoft Clipart, reconstructed by Ren Garcia