Credit: Do You Shop at the "Special Sale" Store?

Imagine this scenario:

You're driving down a street, in a section of town you haven't visited lately, when suddenly you see an immense new store with huge display windows. As you drive past, you're astounded to see merchandise in those windows that's exactly what you want: the new stainless steel refrigerator you wish you could afford, the living room furniture you've been dreaming of, the power tools your husband's always wanted, the very toys the kids have been begging for. The models, colors, sizes and styles are all precisely what you want. Best of all, there's a huge banner hung over the entrance that reads "Special Sale Today!"

Do you park and go in? Of course! How could it hurt? Maybe you can afford to buy a few things, just a few.... depending on how much they've been discounted. Eagerly, you start looking at price tags.

But something's wrong. Something's very strange. You check a dozen tags, then, puzzled, flag down a sales associate.

"There's been a mistake," you say. "Everything's been marked up. This shirt was $22. Now it's priced at $26.18. These shoes were $40. Now they're $47.20. " You point at a tag, bewildered. "This recliner-my husband would love it-but the price has been changed from $425 to $493. I don't understand. The sign outside says you're having a sale."

"We are," says the sales associate brightly. "It's a very special sale. Everything has been marked up. That's what makes it so special. Now-what would you like to buy?"

Think about this very carefully. Would you shop in a store like this? Would you pay prices that had been increased? Or would you turn around and walk out?

Most people would swear they'd walk out.

And they'd be liars.

Why? Because people shop such "special sales" every day. They pay 6%, 12%, 16%, 18%, even 20% or more for much of what they buy, without even blinking.

They do it every time they use a credit card.

Think about it. Do you pay off your card balances in full each month? Few of us do. But somehow we never quite visualize interest as "real" money. And that costs us-a lot.

We're thrilled with a new outfit bought at 10% off- and paid for with a credit card that charges 12% interest! We use a card that promises to refund us "up to" 1% of the cost of what we buy-then turn a blind eye to the rest of the interest charged. And we pay interest, without protest, not only on the cost of each item itself, but on any sales tax as well.

At 12%, every $1000 worth of average balance on a credit card costs you $120 per year. At 21%, that cost soars to $210 . How high an average balance do you carry on your cards? $2000? $4000? $6000? With a $6,000 balance, a modest 11% interest rate means you pay $660 a year in interest alone! Pure waste, pure waste, pure waste!

So put away your credit cards. If you're planning to buy large ticket items, start stashing money in a savings account now. Then get in the habit of paying cash.

You'll be astounded how much money you save when you don't shop at the "special sale" store.