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Chapter 1: Introduction -Why You Need To Know

Credit – love it or hate it – most of us can’t live without it. Unfortunately, most of us also don’t understand it very well, which costs us dearly in the added interest we pay and total debt it accumulates.

This book should become your best friend, and should be your inside guide into many areas of credit. Having a basic knowledge of the what and how of credit is an invaluable resource for obtaining it, keeping it and then getting rid of it as fast as possible. Plus, you will understand your options. Anyone uninformed, in a hurry, unwilling to ask questions or easily intimidated, will never obtain the best deal for themselves. Let’s face it, nobody has a vested interest in explaining shortcuts, savings or options to you…

Understanding the ins and outs of financing is a mystery to most people. There is no black or white answer and credit decisions are not mathematical equations with right or wrong explanations. Credit decisions are as unique as the people applying, and sometimes that is very confusing. In the time it takes to read the next couple of pages:

• Dozens of Canadians will be filing for bankruptcy.
• Hundreds are signing mortgage papers, trusting, but not really knowing what their rights or interest charges really are.
• Thousands will be buying consumer goods on credit without knowing all the facts of what they’re signing.
• Tens of thousands are charging away on their credit cards hoping, but not certain, to make more than a minimum payment next month.
• Hundreds of thousands are making payments on the purchase or lease of an automobile on terms that might have seemed a good idea at the time…
• Millions of individuals are carrying more than one credit card in their wallet and treating it as cash, with many potential pitfalls

Every day, countless numbers of consumers make poor or uninformed credit decisions that create consequences for years to come. It is never by choice, but because they don’t know the credit tricks or pitfalls, or the right questions to ask…

How did we get here or how do we avoid some of these expensive traps? It will be through understanding the inside rules and tips of credit – “how to get it”– in the least costly way. It is also through managing debt – the “how to get rid of it” part.

Obtaining credit is not a gift or a windfall - it only creates spending power for today. The downside is that repayment must be made at some point. This results in spending more money later when interest charges are added to make up for the “gotta have it today” attitude. So it is always at a future cost when the bills arrive. When you’re making payments on last year’s stuff you’re using up a lot of money that can’t be saved or put towards “this year’s stuff.

This is not a book about numbers – they are deliberately kept to a minimum. Plus nobody expects you to read this book from beginning to end, but it will become an invaluable reference guide. You will see many examples of ways you’ve borrowed without always knowing what’s really happening.