The U.S. Census Bureau projected that there was $870 billion in consumer credit card debt on over a billion cards in the U.S. in 2012 (final numbers haven’t come through yet). That’s a lot of money, but the question remains whether that’s a bad thing. Jeremy and Jennie argue about credit cards.

Credit has been a touchstone of our shopping experience for decades, and its associated debt is a cold-but-expected wake-up call. Generally speaking, we have a tendency to spend beyond our means, given the chance–and boy, do credit cards give us that chance.

The Fed recently released a study comparing 2007 credit card debt with 2010 data and found after the Great Recession had TKO’d our finances, the median card balance was $2,600 (down 16.1%), and that 39.4% of families had credit card balances (versus 46.1% in ’07). Unfortunately, this decrease in debt wasn’t due to an influx of cash. It’s the result of debt holders defaulting on payments and declaring bankruptcy, Nigel Gault, Chief U.S. Economist for IHS Global Insight, told NPR. When the recession siphoned jobs out of the economy, the chunky bills kept coming in and our checking and savings accounts croaked.

Let’s bring this issue into the real world. Joe Consumer has a cell phone. He wants a better one, despite the fact that the up-front cost of the phone is out of his budget. He’s got a credit card though, so who cares? He puts that $250 balance on the card and downloads apps the whole way home. However, since JC doesn’t have the cash in hand to pay now, there’s a good chance he won’t have it next month and that balance will continue to roll over each billing cycle–along with any other expenses he accrues along the way. Worse, change that $250 to $2,500, or even $25,000 and Joe’s got himself in a dangerous situation.

This example, applied more broadly to the housing market, car and student loans, and other consumer debt, spotlights the problem for both ourselves and the economy caused by careless spending. The solution, unfortunately, is difficult to embrace. We need to manage our spending habits and keep our purchases within our means, lest we continue to epitomize Harvard philosopher George Santayana’s words, "Those who cannot remember the past are doomed to repeat it."

Credit may seem like the sweet siren beckoning us to the jagged rocks of debt, but it isn’t always the case. In fact, using credit, even revolving credit like credit cards, can help your bottom line.

Think about it this way. A properly managed credit card builds credit. By paying the bill on time and keeping the balance low, good management will show up on your credit report and can boost your credit score. So if you take out a student loan–sometimes considered "good debt" because it’s an investment in your future livelihood–you may get better terms on the loan if you have a history of managing debt well, because it’s a good bet that you’ll pay off the loan in full.

The same reasoning works for a mortgage, which you’ll need if you want to buy a house. Not many people have $226,000 (the average loan size as of January 2012, according to mortgagebankers.org) just lying around. Mortgages are sometimes also consider-ed good debt. With every payment, you’re building equity in the house (albeit slowly), and depending on the health of the market, the house could increase in value while you own it.

Before you vilify credit cards, remember this: if you pay them off every month, you won’t go into debt. Plus, credit cards offer all kinds of perks. For example, you’re only liable for up to $50 if your card is stolen. Some cards offer return protection–so if a company is refusing to accept a returned item, the credit card company accepts the item and credits your account. Some card companies will even refund a purchase if it’s stolen or broken within the first 90 days, and some will extend warranties for a year. They’ll even cover you if you rent a car with your card. Pretty cool, right?

Yes, a credit card can get you into trouble, but if managed properly, it can be an amazing tool that has your back.

By Jennie Bartlemay Copyright 2013 brass Media, Inc.

It’s never too early to start planning for the future. This is especially true for future homeowners. Even if you have never thought about owning a home or think that you may never want to, it’s smart to plan ahead just in case. Trust us–taking care with your finances now has the potential to greatly impact your ability to achieve your goals in the years ahead. Here are some tips we wish we would have known.

Credit Card Utilization
Lenders will want to see that you are not a financial risk when it comes to credit utilization. Generally, they’ll want to see that you are not near your maximum credit limits; it is suggested that a healthy credit card utilization is less than 35% of your total credit limit for all of your credit cards.

While it’s very important that you establish lines of credit in order to build credit towards purchasing a home, buying a car, etc., it’s also imperative that you are able to prove to lenders that you are responsible with your credit and will pay them on time. Keeping your credit utilization low now will help you prove to lenders that you are a worthwhile investment when you apply for a home loan in the future.

Debt-to-Income Ratio
Home loan lenders look at what’s called your "front" and "back-end" debt-to-income ratios. Your front-end ratio tells you what you can afford in mortgage-related payments each month, which should not exceed 28%. To figure out your front-end ratio, multiply your annual salary by .28, and then divide it by 12. Your back-end ratio is your total debt-to-income ratio, including all of your debt, such as a mortgage, credit card bills, student loans, car loans, child support, etc. The maximum allowable total debt-to-income ratio is 36%.

Savings
One way to keep your debt-to-income ratio low and ensure that you won’t need to over-utilize your credit is to build savings. Life is going to happen, and accidents and unexpected necessities are a part of life. Electronics die, cars break down, people get sick, pets need to be taken to the vet, and family members show up unexpected. No matter how much you plan ahead, you are inevitably going to need more cash than you have at some point. Building up a good nest egg of savings will ensure that you have it when you need it and don’t continue to add to your debt. (For more tips on building savings for purchasing a home, see this ABC News article.)

Credit Scores/Resolving Credit Issues
A low credit score can keep you from acquiring a loan for a home, a car, furniture, and other large items that you will want throughout your life. While you will want to start establishing lines of credit to start building good credit, you also want to be very careful about how you use credit. Credit scores can make or break you. They can also influence the amount of interest you will receive and how large your down payment will be. Also, blemishes on your credit history can negatively influence your score for years, even if you have resolved them. Taking care to clear up any negative marks against you now will help immensely in the future. You can monitor your score for free at creditkarma.com.

Photo by Images_of_Money via cc.

By Leah Gibson Copyright 2013 brass Media, Inc.

 College is an exciting time, but it can be hectic. Between classes, working, and spending time with friends, you might miss out on great opportunities that are only available while you’re in school.

Besides sports, chances are there are also speakers, presentations, art exhibits, theater shows, concerts, and other activities sponsored by clubs and the university.

Career centers offer assistance with writing a résumé, building a portfolio, interviewing, and finding a job.

Simply showing your student ID card can get you reduced admission to movie theaters, museums, and many other places. You can also score discounts at restaurants, local businesses around your school, and membership to professional organizations. Even retail stores like Apple and J. Crew offer discounts just for students.

An on-campus health clinic can offer affordable medical treatment, various screenings, and even prescriptions.

Academic staff have a lot more to offer than just the ability to lecture. They can provide advice on what courses to take and help guide your future career. Nurture good relationships and you may have resources for letter of recommendation or networking leads, internships, and career opportunities.

There is always something going on around campus that offers free food. Events and meetings sponsored by clubs or organizations generally offer snacks, tempting hungry college students to attend.

Most universities offer a gym or recreation center that has workout equipment, sport courts, and exercise classes.

The types of services vary, but you can find care for your children while you’re in class, free bus services around campus, and free counseling for you and your family. Don’t forget access to computer labs with the software you need to complete you assignments.

Instead of spending way too much buying all of your textbooks, check to see if they are available at the library first. Besides thousands of books, magazines, and newspapers, your library has access to medical, law, and other databases that you usually would have to pay for. You may also be able to borrow movies.

They aren’t there just to drain your wallet. The student finance department at your school can help you find grants, search for scholarships, find the best payment options, and help you understand your loans. They can also offer valuable information on filing taxes and help you find on-campus employment.

Bottom Line: The National Center for Education Statistics estimated that the average tuition and required fees at public higher ed institutions totaled $4,632 in the 2010-11 school year (most recent data available). Be sure to get your money’s worth, and take advantage of the resources available to you during your time studying.

Source: ed.gov

© 2013 brass|MEDIA Inc. Used with permission.

brass|MEDIA Inc. licensed content is provided with the understanding that the publisher, copyright holder and organizations distributing the magazine are not rendering investment, financial or other professional advice. Investment and other financial decisions depend on each reader’s individual facts and circumstances. You should not make decisions based on information contained in licensed brass content without the advice of a qualified professional.

By Kristen Kuchar Copyright 2013 brass Media, Inc.

Copyright 2013 brass Media, Inc.