Worry is the interest paid to those who borrow trouble. – George Washington
Finance it! That should be slapped on bumper stickers across the country.
There are now loans for just about anything you can think of. Whatever your heart desires, you can finance. Almost.
My father would say that people need to learn discipline as they want to do every whimsical little thing that comes to mind and this can cause trouble in your life.
I learned at a young age that trying to get your little hands on everything you crave is a gateway to higher levels of debt and spending.
It starts with one video game and then balloons to buying the console, accessories, new games every other week, and monthly subscriptions to gaming magazines. That quickly escalates to $1,000 iPhones, $2,000 MacBook’s and flying first class everywhere. Even if it is drivable and only a few states away.
How is all this lifestyle creep paid for?
With plastic.
After working at a federal credit union, I got the inside peek behind the financial curtain into many strangers lives.
Some people are clinging to their middle-class status like the ones they had in their childhood upbringing, while others are dangling over the financial edge and many more have fallen over the financial precipice completely.
Financial institutions knowing this fact, as wages have been stagnating since about 1979, are all too eager to fill that gap in earnings with loans.
Let’s find out what type of debt is out there awaiting consumers that are not financially savvy enough to avoid them or are left with few alternatives to avoid them in the first place.
NO CASH, NO PROBLEM
Quick to borrow is always slow to pay. – Proverb
How many times have you heard commercials that say your job is your credit? Get real. Your credit is your credit.
Miss enough payments and that job means nothing. They will repossess anything.
I saw this up close and personal at the credit union. I saw cars getting repossessed, families stressed out and on the edge of a financial cliff, and those with bad credit had it the worst of the lot.
Is your credit score too low or in the 500’s? Forget about it. Either you will not be able to borrow or it will be at interest rates so high you will be paying off that sweater you bought for your kid’s 3rd birthday when your kid goes off to college.
Do not be fooled into thinking companies are being so nice to give you this product for low monthly payments. That low monthly payment of $42 over 24 months is still over $1,000!
If you must borrow, get those scores up. That way you pay less interest.
IS IT FOR SALE?
Of course, it is! Everything is for sale. And its pricey too.
“A business that makes nothing but money is a poor business.” – Henry Ford
They will let you subscribe to just about anything, for a fee. Much unlike this blog, which you can subscribe to for free, you have to pay for anything you deem necessary or desired for your life.
Just because it is for sale does not mean you are not shelling out big bucks for it. Case in point, if an item is on sale for 25%, then you still have to pay 75% to take the item home with you.
I say skip the for sale signs and racks and focus on only buying quality products that you need and truly want, but that you can actually afford.
BUY NOW, PAY LATER
As an individual who undertakes to live by borrowing, soon finds his original means devoured by interest, and next to no one left to borrow from – so must it be with a government. – Abraham Lincoln
This is what I feel is the old bait and switch. Sure, you can finance it now and pay later, but later is going to be a long time and it’s going to cost you…A lot.
I say avoid paying interest and forever and a day.
Read my posts on savings or get my eBook on crushing debt and saving $10,000 every single year to see how you can save and start paying cash.
LOANS FOR EVERYTHING
No one ever went broke underestimating the taste of the American public. – H. L. Mencken
Over the years, I have started noticing more and more that not only is everything for sale, but it is able to be financed.
What has been really glaring has been the new loans that have crept up and put out in the main stream for the last 10-15 years.
What loans am I talking about?
- Holiday Loans (for Christmas Presents)
- Vacation Loans (finance that cruise)
- Internship Loans (finance additional training along with college tuition)
- Summer Loans (for the gap between Fall and Spring college semester)
- Care Credit (healthcare financing)
- Hurricane Loans (National Disaster Loans)
- Government Assistance Loans (Government shutdown loans)
That’s right. If you have never heard of some of these loans listed above, that is because they are not often advertised except during certain economic times or periods or places such as college campuses or certain banks.
Do you really want to finance Christmas?
You take out a loan for $1200. You have 12 months to pay it back with interest. The time you were supposed to be saving (the previous 11 months) you were repaying this loan. That leaves you for no funds for the following Christmas. You go to the bank and they say, “we have this loan that could help you out.” Just skip it.
Better yet, have the family pull names out of a hat and just buy a gift for that one person. Save a fortune. Your bank account will thank you.
The ones that really get me steaming are the National Disaster and Government assistance loans. People are in a vulnerable position and you want them to go into debt! More debt! Really?!!
No one plans for national disasters. You can plan your finances, but some things are not all foreseen.
For instance, some people lost their homes during the most recent hurricanes in Puerto Rico and Texas. The insurance companies were saying they had to pay a deductible to get their home rebuilt. This was to the tune of $5,000! Most people don’t just have that type of money laying around.
Borrowing will only put you deeper into debt and unable to save when an emergency like this happens.
The worst by far is government assistance loans for the government shutdown. Folks would not need a loan if they could save. Now, you want more of their money, which they don’t even have? What sense does that make.
I say focus on building up the rainy day fund so you are not caught out in the financial rain without a savings umbrella.
HOW MUCH IS THAT LEXUS IN THE WINDOW?
“A business that tries to save money by not advertising, is like a man who tries to save time by stopping his watch.” – Henry Ford
It’s all about advertising.
That’s why so many people are pulling up in Target parking lots wearing Gucci boots, carrying a Louis Vuitton purse, all the while texting on an iPhone on to buy $10 socks that are marked down and dare I say it On Sale.
See my post on Name Brand Labels
I see more folks driving luxury vehicles now than I have ever seen in my life.
What happened to just needing to get from Point A to B?
Please do not let the smell of new leather cause you to have empty pockets. No car or gadget is worth going into debt over. Or worse yet, going broke.
On one television show, I saw a mother of two young kids trying to see if she could come up with the rationale to finance a $100,000 car! Do not do that. It is not worth it.
See my post on 3 Money Lessons from Til Debt Do Us Part
JUST SIGN HERE
Sell to the masses, eat with the classes. – Henry Ford
It has been often stated, if you sell to the classes, you’ll dine with the masses. But if you’ll sell to the masses, you’ll dine with the classes.
Another spin on this quote is this one here.
Sell to the masses, eat with the classes. Sell the classes, go belly up!” – John F. Savage
It is said the majority of people rent this world from a minority of people. That is how it goes. Unless you change the status quo. Become an owner. Keep more of your money and always invest.
They make it all too easy for you to sign on the dotted line and then have to fork over 25% of your paycheck just to pay for your items.
I want to pay for the item, get it handed to me, then transaction over. Installments suck!
I say save for what you want.
Not sure where to start.
Just start small. Even saving $5 a week just to get in the habit of saving is better than doing nothing and having no savings at all.
So, please do not sign on the dotted line. Do everything you can to save. It will be your safety net should real disaster strike because when it does it’s like lightning. It usually strikes fast and more than once.
Play good defense and save. Surround your financial house with savings. Do not get tackled because you left your wallet open, figuratively speaking.
Plan your money smart and be safer financially.