The Suggested Highway Code For Credit
In the United States thirty-three percent of adults are 20 percent overweight. In the UK nearly a quarter of adults are obese after rates rose by 50% in the last decade. Obesity is associated with many illnesses and is directly related to increased mortality and lower life expectancy. Tackling obesity is a government wide priority.
Alarmed by the growth in obesity rates from Scotland to Sicily, the European Commission yesterday announced food labeling plans designed to help consumers reject junk food and choose a healthier diet.
Under the proposals put forward, six measures will have to appear on the front of packages of food giving information on energy, total fat, saturated fat, carbohydrates, sugar, and salts. The labels, which will have to be prominent, will also indicate what percentage of advisable daily intake the measures represent.
In Britain, the Food Standards Agency uses red, yellow, and green to rate each product as high, medium, or low in four ingredients: fat, saturated fat, salt, and sugar. The system has been adopted by a number of British companies for some products, and its effectiveness is being evaluated by the agency.
For some people, emotions influence eating habits. Many people eat excessively in response to emotions such as boredom, sadness, stress or anger.
The average Briton is £33,000 in debt and the average American $170,000. In other words, credit has become a huge headache. And this is only one stress-related illness debt can cause.
Tossing and turning at night with visions of screaming collectors dancing in your head can even make it hard for you to lose weight.
There are similarities between food and credit as they are both a vital source of living consumed on a regular basis and which can be used or abused. So if there are now new requirements for labels on food I started wondering what kind of labels would we put on credit? After all if raising awareness is used to tackle obesity by encouraging everyone to look at food labels why shouldn't it be adopted to raise people's awareness of credit products?
Perhaps we could adopt a color coded traffic light traffic light system similar to the one used by the Foods Standards Agency . I've also thought of a few examples.
If it were not for credit most people would not be able to buy a house. A mortgage is considered a good debt because homes generally increase in value over time. Therefore I would label it green. However if you borrowed unrealistically and each month found it difficult to make mortgage repayments and you got into financial difficulties then it would change from green to a red.
Use a credit card for safety. Especially when out of town or planning to make a large purchase, a credit card eliminates the need to carry around large sums of money. Your credit cards should be used for their convenience and ease of use. In these circumstances it would have a green label HOWEVER if you are using your credit card to make everyday purchases that you cannot afford to pay in cash, then it would become red.
If you have credit card debt that you would be able to pay off if not for that pesky interest, then consolidating your debt onto a new credit card with a low introductory APR might be just what you need. In these circumstances it would have a green label. However if you used the credit card to build up a new debt and commenced the cycle all over again ('gerbil on the treadmill' syndrome) then it would have a red label.
You may be tempted to use a home equity loan when buying a car because you're likely to get a lower interest rate than you would on a car loan, and the interest is tax deductible. I would label this as yellow because this should be exercised with some caution because before going this route you should ensure that you can afford the payments as if you default, you could lose your home.
I also think that you can use this color coded system for ourselves as we all have a personal traffic light which should reflect our overall financial situation.
Green.. you have a good history of repaying previous credit agreements without difficulty.
Yellow.. you have had some minor problems with previous borrowing. Typically been late making payments, missed some payments but overall have been able to repay the borrowing on time.
Red..need financial advice to help them manage their situation
So here is my new highway code for debtors summed up in my usual way!
Helen says:
Making the healthy credit choice isn't always easy – sometimes there seems to be so much to remember. But with traffic light colors you just need to go for as many greens as you can, exercise some caution with yellows and avoid choosing too many reds. This way you'll know you'll be making a healthier choice
