You might have read about our quest to find a rocker in the Garage Sale Lady article – this is a prequel to that.

My wife I and were at R.C. Wiley’s looking for a rocker a few weeks ago. We didn’t really find what we wanted, so we began to make our way out of the store. As we were leaving I couldn’t help but overhear a snippet of the conversation between a salesman and a customer. He had a little clipboard out and appeared to be running some numbers. I heard him say, “If you make it a 7-year deal, your monthly payment for the couch would only be $26.

I ran the numbers when I got home. I didn’t hear how much the sticker price for the couch was, so I’ve assumed an interest rate of 5% – which I think is downright generous. That lady was going to spend $1,802.80 on a couch – over a seven year period. She was haggling with the man over the monthly payment – not over the sticker price of the couch. For every year he was tacking on to that financing plan – she was paying more for that couch.

I’ve been paying more attention to the advertising done by credit card commercials lately. Just the other day I heard on the TV that if I wanted to support the U.S. Olympic team then I should get my Visa Olympic Card. “The only card accepted at these summer games.” And I used to think I was somewhat patriotic.

Credit is getting absolutely out of control. I don’t believe in borrowing money for anything but a home. And even then, I plan on putting down a hefty down payment as soon as my wife and I decide we’re no longer renters. You can read about my stance on mortgages in this article.

Millionaires do not use consumer credit. Read about that in Dr. Thomas Stanley’s book “The Millionaire Next Door”. I firmly believe that is part of the reason they are wealthy. “Oh, the rich are greedy, they don’t get taxed enough” blah blah blah. The overwhelming majority of them never received any type of inheritance money. They started from economic ground zero – where my wife and I currently hang out.

I’m off topic. Back to credit.

Never borrow money to purchase something that depreciates in value. Yes, Cars depreciate in value. So do boats. As far as I know, so do groceries.

“But I pay off my balance every month with my credit card. I get nifty prizes, airline discounts, and cash back!”

The vast majority of those prizes are never redeemed. You have to spend money to get the prizes. This is what I think happens when you have rewards attached to your credit card (or debit card for that matter – Wells Fargo wants me to join the program for $12 a year). Let’s say you get $200 off of your next airline ticket – or better yet – let’s say you get it for free. You get a roundtrip ticket for free…right. I contest that you subconsciously factor these rewards into your purchases. Because you know you are getting airline tickets or one or two percent cash back you “over-purchase”. You justify purchasing things you wouldn’t otherwise because of those rewards that are sitting there just waiting to be earned. You can argue with me about this – but I’ll tell you this: If it weren’t profitable for the credit card companies, they’d stop. If you aren’t actively budgeting, I wouldn’t touch it.

I challenge you to go against the grain, swim upstream, stand out from the crowd. Destroy your credit cards! Let me know when you have. I’m keeping score.