If a family has $125.00 per month left over after paying all necessary bills and living expenses and they find they want a new big screen TV, chances are they will purchase that TV using a credit card. The week after they purchase said TV they have car trouble and are forced to charge that repair bill on their credit card.
Now, and forever they no longer have $125.00 a month left over and will be forced to live paycheck to paycheck. A layoff or even a couple of short weeks at work can force that family into homelessness. Now had they chose to save and/or invest that $125.00 per month, they would have had to do without that big screen TV for four or five months but even after purchasing it, they would still have had enough to cover the emergency repair bill and would have still had the $125.00 or month left over at the end of each month.
If they never had to touch that savings, in twenty years they would have saved $30,000 but would have accrued interest on that. They then could have withdrawn $125.00 a month forever without ever touching the money that had been saved.
Credit cards only stimulate the economy by the amount of debt a family racks up using them and willcause the economy to shrink by at least that amount when a user cannot pay.
The problem most people have is their inability to save their disposable income. People will purchase the most car they can based on their income or buy the biggest house, or the best clothes they think they can afford. If they would pay themselves first, and then spent the rest, they would discover that life would be so much easier and in the long run they will have a much better life that the Joneses ever dreamed of having.
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