Misperceptions....

I read the blog of a certain individual who is a successful boutique soundtrack producer.

Today, he made a comment in his blog entry that "Yesterday hundreds of thousands people spent money they weren't supposed to have."

And he seems to think that this means that it isn't true that we live in a depressed economy, it isn't true that jobs under the President have not recovered, etc. etc.

This is an intelligent guy, so I was surprised by his total misunderstanding of the situation.

I would be willing to bet that 90% of the people who went out in droves on Black Friday did indeed spend money that they do not have.

It's very easy to do.

They used their credit cards.

So all of these people snapped up deals, and maybe 90% of them used a brand new credit card that won't charge them any interest on their purchases for a specific amount of time. But I'd also be willing to bet that 90% of those people bought so much stuff that when that introductory period is over, they will then start paying 22% interest on their purchases.

I say this bit about credit cards from experience. For the last several months, not a day goes by that I do not receive at least one, and usually two or three, letters from a credit card company telling me I've been pre-approved for a credit card.

And a month or so ago, when I went into Barnes & Noble, they were encouraging people to get their credit card as well.

5% rebate on all purchases made in a B&N, and one point for every dollar spent everywhere else. Plus a free $25 gift card "on my first purchase."

So I applied for that one online and was accepted immediately.

The only problem is I've been seeing the Silverlight (Silver-something) commercials by Samuel L. Jackson lately, and with that card you get 5% cash back on every purchase....every damn day. (I'm sure I saw at least one version of this commercial where he did say the word "damn," but I haven't seen it recently.)

That of course would be a much better deal, but I've got so many credit cards now (yes - I applied and was accepted for all these major credit cards (each one with a different name, for example Visa has the Freedom card, which I now have, but I prefer the look of the Slate card they offer, it's a sad thing when you can apply for credit cards based solely on their appearance), this despite the fact that I am self-employed - they must have gone solely on my credit score because they sure didn't have an employer to talk to).

Long story short, I could have gone out on Black Friday and bought $7,000 worth of goods, spending money I don't have, but I learned my lesson about the tender trap of credit cards decades ago.

(I applied for the cards just out of curiosity, just to see if they'd actually give them to me, I don't need them and don't intend to use them - except the B&N card, of course.. The others are tucked away just in case of an emergency - and knock on wood I'll never have to use them.)

People spend an average of $700 on Christmas presents
This is another sad statistic. I don't spend more than $100 on my Christmas gifts for folks, but that's because all I give are books.

Most people go into debt to buy Christmas presents, reinforcing to little children that Christmas is all about receiving presents - and of course that is just what businesses want you to think. These days, if a kid doesn't get hundreds of dollars worth of gifts - that outpace what he received the year before, he or she tends to throw a fit - or parents suspect this and pile on the gifts just to prevent it from happening.

It will be very interesting to read a year from now just how many people default on their credit card bills, or go to the Credit Card Helpers of America (I can't remember their actual name) where they can get their debt cut down to pennies on the dollar. Good for them, good for the stores that sold them the merchandise, not so good for the "evil" credit card companies who have to eat the debt.

Pay off your credit card bill every month
If at all possible, you should pay off your credit card every month. Use the thing for convenience because you get points for it, but never spend more than you can afford to pay off. Otherwise - every single thing you buy will cost twice as much as it originally cost you, in interest (and potential late fees).

For freelance writers, especially, whose earnings each month can fluctuate, going into debt with credit cards is to be avoided if at all possible.

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