Yahoo has a list of 10 retirement pitfalls and I'm going to list and comment on them all. Here's today's pitfall:
Accumulating credit card debt: Credit card debt means that you are paying interest to the credit card companies instead of growing a retirement fund. It's one of the worst things that you can do. When you end up paying credit card debt rather than placing the same amount of money into your 401(k) or IRA, your retirement fund will look a lot less healthy in the long run.
Not only that, but when you have credit card debt, compounding is working against you instead of working for you (as it does when you save for retirement.)
Credit card debt can be a killer at any age, but as you carry it through the years and towards retirement, it gets worse and worse. Do yourself, your finances, and your retirement a favor and get out of credit card debt and resolve never to get into it again.
For more thoughts on this topic, see these posts:
When I graduated from college, my wife (not married at the time) were carrying some credit card debt and we worked very hard to eliminate that from our lives. Since we have paid it off, we have not paid one penny of interest.
We do currently have some credit card debt but only because we have been leveraging the 0% balance transfers to earn some interest back from the credit card companies.
That experience of being in debt and learning how difficult that would be to accomplish our life goals was the inspiration behind me starting my personal finance blog and why I enjoy reading so many other fine pf blogs like this one. Being saddled with credit card debt is no way to go through life and any little bit I may be able to offer to someone else to help them out is priceless.
Posted by: My New Choice | June 11, 2007 at 04:42 PM