Beware the Credit Cards and Financial Institutions.....Even Credit Cards are Bad Credit LoansWhile recovering from a short bout of illness I have been reading a lot about the credit crunch. What I find remarkable is how the financial institutions are squealing about the situation that they themselves created. In their avarice they created low cost products to get market share and these products were sold to people with low incomes and ratings and in some instances little chance of making the repayments. When the institutions realized this was risky because of potential payment defaults they bundled the contracts together and then sold them as 'bonds' to other financial institutions. Bonds are supposed to be a secure form of investment and so these bonds were then spread around the world leading to where we are now, in a monetary squeeze. How's that for a case of deception and dishonesty.
Yet, we as mortgage holders, investors, savers, taxpayers et all are expected to pick up the bill as in the case of recently nationalized Northern Rock here in the UK. All of which underlines to me how important it is to make sure you are careful how exposed you become. What do I mean by exposure? I mean get to a position of not having to rely on credit. Minimum exposure. Now this may seem a tall order but if you are in business on your own account it is possible. Your business finances are separate and distinct from your personal finances. It's important to remember this from day 1. So while keeping your business fully funded it's wise to only make drawings that the business can afford. When you get the business more established then is the time for some more ambitious planning and your aim at all times is to be cash secure, in the business and personally. To do this you plan your way to a life of paying by cash. When I was fully active and making a lot of money through my consulting activities I got used to paying everything by card. "It's no problem", said I, "as I pay off my cards in full every month". Which as far as it goes is OK. What I did not take into account was that withdrawing from what is in effect a large monthly loan [because that's what it is and at punitive interest rates] can be a long painful process. You see if you are wanting to avoid interest payments unless you have cut out all spending on your cards you will have upto twice the monthly spend amount to settle from what could be reducing or in extremis no income. It took me a long time and some pain to correct this situation which is why I am recommending the # Clickbank product for this difficult time, the Credit Secrets Bible. Once again the old adage is true - cash is king, be it in business or private life.
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