Mountains of Money: Revolving Debt

Secured and unsecured debt. What do I need to know about making ordinary payments and money?

Having just taking credit cards for granted means taking for granted that I would always have a source of income to pay off the remaining balance.  Revolving credit allows for a balance at the end of the month since only a minimum payment is due.  Sometimes the balance accrues for individuals that end up without a job with a salary and benefits, or without a savings account that covers almost all of the expenses. Not taking positive actions leaves an in-debt person without the means of successfully resolving their fate of not having enough.  

Whipping out a credit card and making a payment without much thought or concern was just the way money works in the world of finance and business.  Then receiving the bill and making a payment without examining what was bought and how much was spent.  Falling into a debt cycle may require halting all activities that require a payment.  A typical example is the cost daily cup of coffee. Examining over a month to a year of what a coffee habit costs a consumer. 

In the world of finance the payment process is often an automated process designed to get what is due to the creditor's bank account.  First things first, using credit cards is not always a best choice since not everyone considers developing a set of personal finance skills one of their first priorities.  Priority means a daily record of expenses and income, a monthly budget and allocated spending plan.

As soon I graduated from engineering school, my sister set me up for my first credit card, an American Express card.  Oh boy, then there was a Discover card and a Fuel card and of course a Bank Visa card. My sister started her career by entering a college program in art and design.  She was interested in entering the world of fashion and started with an internship in Filene's in retail and fashion. After some deliberation she changed her career focus and switched to accounting. And at that time she was a female who entered a male dominated field by getting her CPA. 

Attending and participating in financial literacy workshops help convince me not to use credit cards, instead to buy with cash.  I finally understood that when I use my credit card I am taking out a short term loan. It is a debt I need to pay since I am using money that I do not have in my wallet or bank account. When I use my credit card, I am borrowing money from a creditor.  That is called a line of credit - a revolving debt.  The financial arrangement made with the creditor includes an set or variable interest rate which can effect the ability for someone to pay off the entire balance owed the creditor.

Using revolving debt to cover expenses while unemployed may lead to bankruptcy.