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I’ve seen quite a few people make quite a few financial mistakes over the years, and heard of others as well. Part of saving money involves not making awful financial decisions which will cost you more in the long run. Here are five of these decisions that I strongly advise you stay away from at whatever cost:
- Payday loans. These are absolutely one of the worst financial choices you can make as once you’re in it’s incredibly difficult to get out of the loop. They charge outrageous fees that will cripple you the first time you use the service and force you to go back. From there, it’s an endless circle. If you’re stuck for cash for a few days, ask a friend or a relative for a temporary loan, use a credit card (with the full intent of paying it off of course) or try selling some books or CDs at a pawn shop for a few bucks. Anything except payday loan places
- Not having emergency funds. I couldn’t count the number of people I know with absolutely no form of emergency funds. If you get sick and can’t work, if you’re in an accident, if your car breaks down and you need to fix it, these are all things that emergency expenses are supposed to cover: the unexpected, which does happen! You need to be prepared for it, and not having emergency funds is a great way to spiral yourself into credit card debt and financial suicide.
- Paying off your debt with retirement savings. You’ll not only face penalties for doing this, but you’ll lose all growth potential that money had in the first place. If you start spending that money there’s a good chance you’ll continue to spend that money until your retirement savings are all but gone. Always do your best to keep your retirement savings for just that purpose: retirement.
- Credit card debt. This one is pretty obvious: when you’re paying up to 30% APR on credit cards, only a few years can result in you paying double what you initially did for a certain item. Try getting 0% APR cards and paying them off as quickly as possible, using this article as a guide to avoid being penalized.
- Using a HELOC to try and get rid of debt. At first glance, this may seem to be a good option: using the equity in your house to bring your debts down to a manageable level. However, you haven’t considered that while that HELOC may only be at 7% instead of 20%, the loan is over 30 years. You’ll normally end up paying more in interest over those 30 years than you would if you just did your best to pay the credit cards off within a year or two.
Stay away from all of these options. There’s no good to come of using any of them and they’ll do you more financial harm than good in the long run. A lot of them are common sense, but they do bear mentioning: if you’re in the situation where you’re doing any of the aforementioned, you need to do your best to get out of that situation for financial freedom.
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[…] Fly Boy Net wrote an interesting post today onHere’s a quick excerpt I’ve seen quite a few people make quite a few financial mistakes over the years, and heard of others as well. Part of saving money involves not making awful financial decisions which will cost you more in the long run. Here are five of these decisions that I strongly advise you stay away from at whatever cost: Payday loans. These are absolutely one of the worst financial choices you can make as once you’re in it’s incredibly difficult to get out of the loop. They charge outrageous fees that wi […]
[…] Five Ways to Commit Financial Suicide I’ve seen quite a few people make quite a few financial mistakes over the years, and heard of […]
[…] Five Ways to Commit Financial Suicide I’ve seen quite a few people make quite a few financial mistakes over the years, and heard of others as well. Part of saving money involves not making awful financial decisions which will cost you more in the long run. Here are five of these decisions that I strongly advise you stay away from at whatever cost: Payday loans. These are absolutely one of the worst financial choices you can make as once you’re in it’s incredibly difficult to get out of the loop. They charge outrageous fees that wi […]
Credit card debt. This one is pretty obvious: when you’re paying up to 30% APR on credit cards
[…] Five Ways to Commit Financial Suicide I’ve seen quite a few people make quite a few financial mistakes over the years, and heard of others as well. Part of saving money involves not making awful financial decisions which will cost you more in the long run. Here are five of these decisions that I strongly advise you stay away from at whatever cost: Payday loans. These are absolutely one of the worst financial choices you can make as once you’re in it’s incredibly difficult to get out of the loop. They charge outrageous fees that wi […]
[…] Five Ways to Commit Financial Suicide I’ve seen quite a few people make quite a few financial mistakes over the years, and heard of others as well. Part of saving money involves not making awful financial decisions which will cost you more in the long run. Here are five of these decisions that I strongly advise you stay away from at whatever cost: Payday loans. These are absolutely one of the worst financial choices you can make as once you’re in it’s incredibly difficult to get out of the loop. They charge outrageous fees that wi […]
I think you need to be more specific on the payday loan option. I have used payday loans in a pinch and have not gotten myself into trouble with them. The key to using any form of loan, is to not get more than you can pay back. If you know that you will be able to pay a payday loan back in two weeks, then you can choose to get one, if you are not sure, or are sure that you won’t be able to pay it back, then don’t. It is pretty simple, and then the price is reasonable because you are only paying it once, and not over and over again.
That’s fair enough, but most people do fall into the trap where if they spend too much one month they’re going to spend too much the next month as well, and so on and so forth!
Gratalupous, yeah, you’re fine if you can pay it back in two weeks. But why use it? You’re better off putting it on a credit card where, if it turns out you can’t pay it off, you’ll “only” be paying something like 30% per year. With a payday loan, you’ll be paying more like 300% per year.
Seriously, “I think I could use a payday loan” directly translates to “I need to change my lifestyle and get financial councilling NOW.” It probably means you’ve already messed up on one or more of the other points listed here.