WARNING! Use optimism with credit sparingly

I think credit should come with the above warning. We tend to be overly-optimistic when it comes to using credit. The warning signs are easy to recognize.

• we can afford that loan because I’m getting a raise
• let’s take advantage of that great no-payment-no-interest deal and use our income tax refund to pay it off
• I will buy that living room set on credit and cut back for the next six months and pay it off

The justifications may differ but the results are often the same. Great Intentions lead to less than great outcomes.

• the raise didn’t come through. Worse yet, you were laid off
• your tax refund was half of what you expected
• cutting back was impossible! There was a wedding, the car broke down, etc. Etc.

The diagnosis! – don’t plan future credit commitments on possibilities. Pop a patience pill and make the purchase when the money comes in.