Investing and Credit Card Debt


A few days ago I had a conversation with a friend about credit card debt, which in his case was quite long and continued over the years. It's a very smart guy but, like a lot of people, he seems to have some puzzles on which it's all about common sense about money. What really surprised me in this conversation, is the fact that he tells me that he is putting money aside for his retirement and is trying to get it right. invest in the stock market with mutual funds. When you consider a credit card debt over a number of years ranging from 10 to 30% interest, placing money elsewhere than trying to pay this horrible debt is clearly insane. On the one hand, you'll never get the kind of yield that credit cards can get by uprooting American public opinion by charging interest rates designed to ruin financial life by investing in the stock market. For me, getting rid of this horrible criminal debt is just common sense.

Over the years, the fact that Congress did not intervene and regulate credit card companies to prevent the abuses they had been committing for so many years made me angry all the time. There is no way for a credit card company to charge interest as high as 30%. What would be fair would be a maximum rate of 10%, which would only be allowed under the worst credit conditions of the person who has the debt. This type of abuse has been going on for many years in this country and we all know that after medical expenses, which is another financial tragedy in this country, credit card debt is the second most common cause of bankruptcy.

As far as my friend is concerned, I think I convinced him that his priority now was to withdraw the money he had from extra income each month and spend it on the elimination of that debt, as well as on the setting up an emergency fund in case he loses his job. My friend is 60 now and unfortunately divorced about 2 years ago. It's a good guy and deserves better than a divorce after 30 years and then loses half of his savings, but that's what happens to so many people. We also all know that divorce is also one of the main reasons people go bankrupt and I know that the second reason for divorce is due to financial problems.

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