The Golden Rule of Personal Finance

There are many different rules to follow when evaluating one's personal finances. But, which one is the most effective? Or, if we had to choose one to follow out of all the different possibilities, which one should be chosen?

I personally believe that the best rule to follow is to never carry any credit card debt. The only debt that one should be carrying is a mortgage and student loans. If one must use a credit card to make a purchase, one cannot afford to make that purchase.

Why is credit card debt so horrible? Simple, because it carries high interest and is most often used to purchase things that are not needed to live life. The primary consumer use for credit cards is simply to purchase things sooner than the consumer would if the consumer saved up for them. A credit card is a short-term, high-interest loan. The reason credit card companies exist and want consumers to use credit cards so much is that the credit card companies make billions and trillions of dollars off of the interest. Credit card companies have duped most consumers into believing that a certain item is needed now, and that one's life is worse the longer one has to wait for the item, even if the wait is only the period of a week or month.

Credit card debt does the consumer no good and only serves to make other people rich. The responsible way to use a credit card is to make the necessary purchases one needs and then pay off the balance in full each month. If one is carrying any debt at all, one is living outside one's means.

The only exception where one needs to use credit cards and carry a debt is during extreme life circumstances, such as to pay off a medical bill to save one's life (even then this is a stretch; one can pursue other means to pay off such bills or stave off the hospital). Other than that, credit card debt is a great evil that people have been duped into believing to be a necessary part of life. Don't buy the hype. Some things are nice to have, but a person can wait a little longer to have them. If a person uses good financial sense, he or she will have all the money to buy the needed things in life, plus some of the nice things.

So, just be wise and be patient, and all the money that is needed will be there!