Friday, January 26, 2018

10 Financial Disasters to Avoid

For the love of all that's holy, please please, please never get involved in these potential financial disasters..

  1. Time shares.  If you have money to burn, go for it, but for the vast majority of people, time shares are a big annual expense and nearly impossible to get out of (thus the popularity of places such as Time Share Exit Team).  Take the thousands of dollars you would have spent on annual time share fees and book a luxury hotel for a week or so.
  2. Cosigning for anyone.  Even your beloved mother.  If someone needs a co-signer it means they have lousy credit because they don't pay their bills.  If they don't/won't/can't pay their bills you can bet that down the line the loan you cosigned for will end up being all yours to pay off.
  3. Boats, RVs, second homes, etc.  Again, if you have boatloads of money, go for it, but for most people these are very expensive items that you continually need to sink money into for payments and upkeep.  A LOT OF MONEY.  Better to rent these things, use them, then turn them back in with to financial leash to tie them to you.
  4. Payday lenders.  NEVER go to a payday lender.  300% interest on your loan...700% interest on your will forever be burying yourself in debt if you avail yourself of this type of loan.
  5. Rent to own places.  Again, you will be paying multiple times over for an item that's value is dropping like a rock.  If you need a TV, sofa, video game machine, etc, then buy used until you save up the money to buy new.  There is absolutely no reason to pay $5000 for a $700 TV.
  6. Leasing a car.  I can think of no good reason to lease a car (and no, tax write-offs aren't a good reason for the vast majority of people).  People usually lease a car because they want a car that is more expensive than they can afford, thus the attraction of the lower lease payment, and at the end of the lease you are left with a giant-sized outstanding debt on a car that may even be worth that much (and if you turn the car back in you will be dinged for over mileage and other things).  Just no.
  7. Long-term, hard-to-get-out-of gym memberships.  People get a gym membership with the best of intentions but if you stop going to the gym often you can't stop the monthly auto-pay from your credit card (depending on what your contract says, some are very scammy).  
  8. Loaning money to anyone.  We never loan money to anyone.  If the kids have a financial crisis we give them the money they need if we can afford it and let it be a gift.  So many relationships are torn apart because someone lends a friend or family member money and never get paid back thus causing hard feelings all around.
  9. Any loan on which you can barely squeak by on the monthly payments (house, car, other loans).  If you can barely afford the payment on your house or car, it will only take the loss of one pay check to bury you in debt (and probably lose the house or car eventually or be forced into bankruptcy).  Make sure your budget has plenty of wiggle room when it comes to committing to payments on anything.
  10. Other clear scams.  My cousin called me in a panic yesterday because she said her computer stopped working and there was a pop up that said her computer had a serious virus with a phone number to call to fix it.  That's a scam.  People calling and telling you your grandson has been injured and is in a foreign hospital and they need payment this very minute.  That's a scam.  An email that says you won a large cash prize and just need to send a small fee to claim the prize.  That's a scam.  I got a call once from a very harsh sounding lady who said I had an outstanding warrant and if I didn't pay a fine over the phone right away she would send the police to arrest me.  I told her no problem, give me the case number as I would be working at the courthouse later that day and I would take care of it then.  She slammed the phone down in my ear.  That was a scam too.  There are so many scams out there that you really need to check and double check things before you open your wallet.

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