The High Cost of Debt

Filed in archive Financial on September 18, 2008

© liewcf

How much debt do you have?

It is very tempting as a small business owner to get into debt. It doesn't matter whether you put a new printer on a company credit card or have credit extended from one of your vendors you now owe money to someone else.

Eventually the money comes do or you end up paying for that purchase long after you have thrown that product in the junk pile.

To make matters worse you will spend more money on that purchase than you would have if you paid cash. Spending cash is harder to do, makes you think about the purchase more but if you pay on credit card the price doesn't hurt that much. On average you will spend 123% more if you pay with credit than with cash.

The average person is in debt to the tune of $8000 and will end up spending $18,000 to pay that debt off. Personally, I can think of many things I could do with that money than hand it over to a credit card company and get nothing in return.

The HomeBizBlogger has more comments on this and a good source of information is Dave Ramsey.