Ben Eder
P.O. Box 721
Newport, OR 97365

Hasson essay, OSSC
the award is based on a 3-4 page essay:

“The Proper Use of Credit.”

Credit is a fact of everyday life for everyone in America and to insure its success, and the success or our entire monetary system, it must be used properly. To use credit properly, one should only borrow to expand a business, purchase major necessities, or achieve a significant goal that will have life long implications. Credit should not be used to live above one’s financial means, to delay problems, or to gamble on future successes. When credit is used in these harmful ways, it damages the entire stability of our economic system and leads to problems for the individual in debt.
Credit was first established as a tool to aid in economic expansion and generally improve people’s lives. The use of credit soon expanded to create many of the evils we have today and even in ancient times, improper use of credit caused problems. Credit was a tool for the ruling class to secure their position and was considered immoral by some even in Biblical times. Throughout history, problems with the use of credit have developed, and many societies have attempted to deal with it or repress or encourage its use. One constant, however, has been its necessity for progressive economic systems and all successful sovereign governing bodies. If used properly, credit is almost always beneficial and if it is not used properly the damage can be catastrophic.
By the proper use of credit I mean using it as a tool for advancement and not as a means of salvation. Personally, I plan to use credit to finance my higher education so that I will eventually be in a better social and financial situation. I do not plan to get a credit card and buy things with money I do not have and worry about paying for my expenses later. The use of credit is justified when buying a home, car, or education, but not when buying a new dress and a TV to pay for later. Today, there is a huge consumer debt in America. Billions of dollars are owed by millions of people who have no intention of paying back their debt in the near future. It is common for someone to be in debt and often it is not even look on as wrong. Instead of people viewing the situation as themselves owing money to another, many look at the situation irresponsibly, complaining about the system charging them high interest rates for money they need. This attitude has developed from our over-use of credit to live beyond our means and if this trend is not stopped it will be catastrophic. Many count on earning more in the future after they get a better job or get their “lucky break.” Some invest borrowed money hoping to be able to pay it back and earn a profit. This practice was widespread in our past and caused what we now call the Great Depression. In the 1920’s, people were buying large amounts of stocks on credit. This credit was irresponsibly extended by the banks and savings and loan companies. When the stocks failed to produce the income expected, the investors did not have the money to pay for them and the banks then did not have the money they had borrowed from their depositors. This poor use of credit and lack of monitoring at a national level caused a depression that required a world war and fifteen years bring the country back to its former self.
My family has presented my with a model example of the proper way to use credit. My father started out poorly with credit and only recovered with hard work and much planning. He got his first credit card while in college and ran up a huge debt he could not repay. Like many in similar situations he got used to running the card through the strip and receiving what he desired. Eventually it caught up to him and he found himself in debt and without his magic card. A few years later, and more mature and learned in the proper use of credit, he decided to start his own commercial fishing business. He had been working as a deckhand for several years, living inexpensively and saving almost all of his money. He had paid back his debt, but the experience years ago had left his record scarred and no financial institution would lend him the money necessary to purchase his own fishing boat.
At this point many people would give up and forever live with the scare of abusing credit. My dad, however, decided to rectify the situation by using credit correctly to show the bank he was a financially stable individual. He started small by buying a truck and paying it off in two months rather than the two years he was allotted. All excess income earned was spent to pay off his debt. He then saved up all that he could to show the bank his earning capabilities and discipline when it came to money. He eventually obtained the loan and has borrowed money many times since to purchase future vessels and homes. With his first boat he was able to improve his financial earning capability for the rest of his life and today is a model of how a small business can develop and succeed with hard work and the proper use of credit. He always makes the loan payment a priority and has always paid back his debt ahead of schedule. With his good credit we are now able to borrow large amounts of money when needed and live in financial security.
I know that if anything serious ever happened or when I need money for college, my parents’ phenomenal credit history and respect for the system will allow borrowing to meet our essential needs. I, however, do not want to borrow money that I do not have the ability to repay, so I am applying for every scholarship for which I may qualify. My dad has taught me to respect the fact that credit is being extended to you on good faith and it is with good faith that it should be returned. I have also seen what the misuse of credit can cause and how difficult is it to correct past mistakes with credit. The best way to use it is to use it correctly from the start. I have yet to use credit but currently benefit from the convenience of credit by using a debit card which ensures that I already have earned and saved the money I am spending.
It is my belief that credit is extended too easily in our society and this encourages its improper use. Instead of a person who earns $40,000 dollars a year living at a material and social level related to this income, many people borrow so that they can live at the standard people earning $100,000 a year live. The people earning $100,000 a year see this and see that if they borrow, they can live in even greater luxury. It is natural for humans to want the best possible for themselves and their families, but it is a shame when this drive results in destroyed lives and futures. Interest must be paid on debt and payments are usually required on a monthly basis. As these payments become more and more difficult to meet, more credit is often used to pay off the old debt and create new. Eventually, if earnings do not increase, the debtor finds themselves claiming bankruptcy, which means that all the creditors who have loaned money are not repaid. This causes broken lives and economies with these people now at the mercy of the state for support.
While credit can be used for good and evil, if used properly it can greatly improve the life and situation of the individual making use of this system of good faith. In my life and financial dealings I hope to maintain the respect I now have for financial institutions and credit and use it properly to achieve my goals in life.