The psychology of debt

There’s a psychology to debt you must understand to make a change in your life. We’ve been bombarded with the notion of debt and we have responded collecting credit cards by the dozen.

The more you use credit cards the more likely you are to spend more money than you have. The psychology of debt changes you from cash and makes you into a debt-aholic.

J.C. Penny, the founder, didn’t take credit cards or any kind of credit for years. He believed that you should “owe no one” and wouldn’t allow debt for any purchase at his store.

The inventor of the first bank issued credit card was John Biggins of the Flatbush National Bank of Brooklyn in New York, in 1946. In 1950 Diners Club issued their credit card in the US and was intended to pay restaurant bills.

By the 1960s more companies offered credit cards. In the mid 1970s the US Congress began regulating the credit card company. In the late 1990s the Supreme Court lifted restrictions on late payments. Deregulation also allowed very high interest rates to be charged.

As consumers began to accept borrowing into every facet of our lives it began a cycle of debt we haven’t recovered from. It’s interesting that Sears and Ford Motor Company tried to prevent sales on credit. They felt it was better to purchase using cash.

Eventually debt was accepted as a way of life and that is the psychology we live in today.

Next time we’ll talk about breaking the psychology of debt and going from

DEBT to CASH

David…