Consumer Debt Alerts
Some marketing strategies attempt to achieve one simple outcome, “Have consumers spend money, before they earn it”. Consumer debt has now spread like an epidemic across the economy. Credit card debt in Australia early 2009 was estimated around $48.5 billion dollars. Or let me put that another way $48,500,000,000.00 dollars, and that's just credit cards! It does not include personal loans, hire purchase, interest free etc. etc.

There are two major factors when considering the financial impacts of any decision. Impact on cash flow, and net worth (what you are actually worth if all assets were sold). Consumer debt reduces cash flow and is used to buy items that depreciate in value, and both of these factors work against your financial objectives.

Now obviously everyone has lifestyle requirements, but while the use of consumer debt seems harmless at first, it destabilises financial control and creates habits that lead to hardship in the future. You need to establish a balance, between your lifestyle and financial objectives that is right for you. The problem is consumers don't have the required information to help them make that decision, and as with many detrimental financial decisions, lack of information plays a major role.

Consumer debt is your liability, and the institutions asset. Have you ever taken notice how may television adds there are for interest free, credit cards, personal loans etc. etc. Consumer debt is a very profitable for institutions, it increases their cash flow, at the cost of your financial futures.

Interest Free Terms
Now just because there is a title of “interest free” doesn't mean this form of finance does not cost money. Here is a little exercise. If you are considering of buying with an interest free period, try to work out how much money this is actually costing you.

Locate a retailer offering the interest free and select a product that is identical to what other retailers are offering. Electronics and whitegoods with model numbers, are ideal. Select the product and negotiate the best possible “cash deal”. Ask the salesperson for the best possible cash price. Push them hard, “I have seen the same model on the internet much cheaper”, “In fairness, I will be offering the same opportunity to you're competitor and going with the best price”, etc. etc.

Once you have negotiated the best possible cash price, at the last minute have a change of heart. “Actually, I might put this one interest free”, and see what would happens to the price. If the price goes up, that is how much interest free is costing you.