Unfortunately, credit is most often discussed only in negative terms. However, we have to remember its history. United States has the largest and most liquid credit market in the world and that has laid the foundation for much of its developments. Access to functioning credit markets has allowed legendary business people in America to create railroads, highways, modern skyscrapers, global institutions and so much more. Post World War II, the American middle class was created with a functioning system of bank lending where returning soldiers could borrow to buy homes and cars, start families and pursue careers.

However, the same well-functioning credit system has created the common belief among consumers that easy access to credit should be exercised whenever the need arises, and that is a problem. Americans currently have most debt vs. their income capacity than any other time and the financial crisis of 10 years ago was the direct outcome of excess debt at institutional and retail consumer level. While all over the world access to credit is restricted, the ease of access to credit tend to make us forget about the many risks of credit.

By itself, credit is an item used to leverage a situation. It is neutral and neither good or bad. The question is how do we use it and to what degree. The decision to use credit should always be well planned and organized. Among questions asked should be 1) what is the "all-in" cost of the credit 2) can I afford it and what is my repayment plan and 3) what are the risks involved, not only in current financial situation but different and worse circumstances. More importantly, the idea of perpetual presence of credit, a personal financial situation where debt is considered a normal participant in our household budget, should slowly but surely be rejected. Debt is something to be used in moderation to achieve a well-defined personal goal, combined with a clear plan to pay it off as soon as possible.Being knowledgeable about the many details of credit features covered in this week's assigned readings is a good starting point for our discussion.

How can I respond to this discussion?