This story will be a familiar one for most people. Few people, if any, have not had to make a choice about using credit to buy a wanted good or service. Although a common question, it may be one of the most complicate a person will have to make. The question is one that combines many variables that need to be weighed carefully before a good choice is made. Contrary to much of what people read or hear, the best course of action is not as easy or clear as some people think. By getting involved in this story, people will gain a new insight as to how best to use or not use the tool of revolving credit to build a solid financial foundation.

Well, here we are, one more time. I thought this part of my life was over. What is this, butter flies -- it has been years since I graduated from high school and I have taken many college classes before. Thoughts like these and others fill your mind as you walk into an evening college class. Three credits of Accounting 320 will get you that much closer to the Business Degree you have wanted every since you graduated from high school. A few false starts, a full time job, a lay off, and several years of experience after high school has led you back to finishing the degree. You notice how young most of the students in your class look and you wonder if your years and experiences will make you better or worse in the grade department. Oh well, time will tell and you find a seat close to the front of the class. Once seated you laugh a bit as you recall where you sat in your younger years. 

The professor arrives and the class begins much like you expect it too. Introductions, reviewing the syllabus, listing of expectations and basic principles review. All of this material is on power point and from time to time links to current examples or relevant podcasts move the class forward and actually makes it interesting and fast moving. Toward the end of the class, the professor begins to speak more about grading and the reliance on chat rooms, group presentations, and problems. The professor highlights his desire to make this class rigorous in content and also technology connected. No problem, you are not a member of the Geek Squad, but you know technology. Class ends and you hurry home to view the course website and read the syllabus front to back. You’re not afraid, but you begin to think that the decision to go back to school and finish that degree has a few more “costs” than you listed. You also think that you will probably learn more than you expected and the benefits are going to be greater as well.

The next few classes go well, and you are beginning to view yourself as a real learner. You ask questions in class, you find yourself thinking differently, and you think you will begin to participate in the chat rooms as well. A few of the students you are getting acquainted with seem to be gaining a great deal from the website and other technology related activities. One of the things you are noticing is that your laptop is on the older end of what your fellow students are bringing to class and many of the students have ipads. You don’t know much about these items but you make a promise to yourself to research them before next class. 

The research activity was interesting. These small pieces of technology are certainly capable of doing many things and you find that many of your upcoming class assignments seem to connect to the ipad capability. Your research also provided you with a price list and that was eye opening. These babies are expensive! Ironically, your next class linked to your ipad query in a very practical way. This was the class that your professor divided all students into research and presentation groups and a planning time was actually set aside for each group to discuss research topics and presentation structures. Each group was made up of six students and varying majors. Your group seemed young but committed and fun. As the group discussed a variety of topics you noticed all members had an ipad and often they referred to how the group can connect using the ipad and how great it will be in planning and delivering the in class presentation. 

The stage is set. The following day you take another trip to the technology store and you find yourself looking at the ipad and related accessories much like you looked at a matchbook car and storage truck when you were three. The similarity was scary, you know you want the item(s), but you don’t know how you can afford it. The older you get, however, the price gets a lot higher and unfortunately, as an adult the buck stops with you. After doing a rapid calculation, you conclude that the total cost of the ipad you feel you need plus related accessories will be approximately $775.00. You know you have quite abit more than that in savings, but that is for paying tuition and other school related expenses. You could, however, buy the ipad using your credit card.  You are well below your credit limit, but you like it that way. 

Buying something using a credit card for payment is an activity you have had some very bad experiences with. Not long ago you had maxed out your two credit cards and those high interest cards/payments/over limit fees were dragging you into a terrible financial mess. Fortunately you had the opportunity to work a part-time job and you earmarked that income for debt reduction and you now have very small balances on both cards. You wonder if there is anything that you buy that should or could be bought using the card. Are credit cards just evil and should be thrown away. It is interesting that this possible buying situation could be one of the best in helping you answer this question once and for all.

CAN MY CREDIT CARD BE MY FRIEND?

It is time to employ the decision making guide to help you form a realistic relationship with credit cards and other unsecured credit or debt. Keep an open mind as you address the guide’s directions and questions. Remember, like so many things, the right answer is not black or white, but often a shade of gray or in the middle of the extremes. Because each situation is different, the right answer or perspective for one situation may be different for another. It is often said that the best beginning answer for any difficult question is “it depends”. It depends on what the individual decision maker values and the short and long term consequences of any action. 

As you pursue the insights the decision making guide can provide, be sure to focus on the question…WHAT SHOULD I BUY ON CREDIT? Although the final conclusion could be nothing, it is possible that some things will be on the list of credit buying and they will have certain characteristics that make buying on credit a good choice for you. Tools that help you be productive, items that appreciate in value, health needs, or investments may be viewed differently from consumables like a cool leather jacket.  In addition, buying on credit doesn’t only mean using a credit card or revolving credit. Non-secured signature loans are possible sources of credit and, of course, credit can be combined with savings, gifts, or monthly income to buy an item. Good luck and work hard on this one as it will help create a framework of thinking that will last a lifetime.

Applications Insights Guide - click here for facts to aid your decision making process