Credit, do I qualify?

Credit card

Credit is ideally what the working class has access to, but do they really qualify? What does it mean to qualify for credit? Does it mean to be earning enough to pay for what you’ll be buying on credit? It’s more like living beyond your means, if you ask me.

The dream of most, if not everyone, is to live comfortably. We want to afford a place to live and have enough food to eat. We dream to have at least 1 car, and money for wants like entertainment and our preferred lifestyle. The unfortunate thing is that people seldom introspect and evaluate their current financial status. Find out what they can actually afford. It becomes more about what they want than what they can afford.

Financial literacy is the key to responsible credit

In a recent Facebook Live chat on her Facebook page, Financial Literacy with Nicolette Mashile, Nicolette mentioned something I found very profound: “living below your means is loving yourself.”

Yes, it’s nice to qualify for debt, but not when it means pulling your hair every month. Having access to more money is a facade that many have fallen into. Increased access to money means more spending, more assets. We don’t realise that the fact that we buy on credit means we actually cannot afford those things.

Think about it, the debt you take exceeds your affordability. If you hadn’t taken the credit, you wouldn’t have been able to take care of your monthly expenses as well as that you want. Debit orders are deducted when you use credit on a monthly basis. This happens whether you have enough on your account or not. In such cases, it is inevitable for you to not meet your monthly needs.

Credit is most certainly not financial freedom! Financial freedom does not mean having access to money that is not even yours. Financial freedom does not mean deferred income, which is essentially what a credit is: income that is not earned yet. That’s risky.

What is financial freedom?

Do you know what financial freedom is? Taking from Nicolette, financial freedom is when you’re able to put away some money every month, pay your debt while also able to take care of your needs. One can argue that debt can be good and can work for one when they can afford it by being able to pay it every month while also saving and meeting their needs. Yes, that might be true, but there’s a fine line between being able to afford credit and taking credit unnecessarily. Be aware of your affordability. If you won’t be able to afford the monthly expenses of maintaining and driving a Mercedes, don’t take the car on credit until such time your income increases and you’re able to afford it. Provided that that is your plan and that you’ll be working towards achieving that goal.

The bottom line is, you need to evaluate your affordability. That will determine the lifestyle you ought to live. Should you want to live a certain lifestyle that requires more money, look into other sources of income, and no that does not mean working in multiple salary jobs. That’s a topic that needs an article of its own, perhaps soon, but you can check out some detail on it from Nicolette’s Facebook Live chat.

Start with what you can afford. It will make things a lot easier for you.

About Author

Founder and Managing Director of Mpilo Publishing (Pty) Ltd; Blogger; Content writer.


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