5 Financial Traps That Can Get You Into Trouble

Image courtesy of Grant Cochrane / FreeDigitalPhotos.net

Financial difficulties span all across the board from small difficulties to major  ones that can ruin your life. There is a correlation between certain  actions that someone takes and the amount of debt they are in. It is all  too often a common thing to see older people living on social security  with extra money to spare but successful people who make a good amount  of money with nothing to spare. Once financial difficulties start, it  can be easy to keep them progressing and much harder to slow them down.  It feels like everything is piling on you and you cannot get out of the  situation you are in. There are 5 different traps that can suck you in  financially.

Leasing 

Leasing a vehicle is a major trap that people find themselves stuck in.  The problem with leasing a vehicle is that you never own any portion of  the car. You place a down payment down on the vehicle and make monthly  payments to it, however, when the lease runs up you must turn the  vehicle in and then you can lease another one. You are basically  throwing money away in this situation. It is better to purchase your  vehicle and even make payments if you have to. At least this way you are  paying towards something you will own eventually.

 

Credit and Loans

Another major financial trap that catches people is credit cards and  loans. Credit cards are a dangerous habit to form if you do not actually  have the money. A credit card allows you to make a purchase for  something without having to pay for it at that moment with the intention  that you will then pay off your balance or at least towards it. Some people become stuck and then never pay off their credit cards or become attached to them and have to continue using them. High interest rates and monthly payments will surely get you stuck.

Payday loans are good for the once or twice use but if you continue to use them you will become financially strapped. People rely on these to help them pay for something that they do not have the upfront money for. Payday loans are very easy to obtain but they carry a hefty  interest rate with them. Normally you only have a week or two to pay  them back.

 

Emergencies

Not saving any money for emergencies will get you into some trouble. It  always seems like when you do not have any money set aside, something  that can go wrong, will. You are left to then find a source of funding.

 

Retirement

Many times people do not think about saving money for retirement. It is  important to do so to be able to maintain your lifestyle later in life.  If you start saving at a young age, the money will add up.

 

Lifestyle

People run into trouble when they live a lifestyle and do not have the  proper funds to live that lifestyle. It is common to see people spending  more money than what they make. This type of lifestyle will get you  into a financial trap.

Financial traps are easy to get into and harder to get out of. It is  common to see people stuck in stressful, financial situations. Learning  and recognizing the habits that put you in a financial dilemma is the  start to freeing yourself from the debt that holds you down.

Related Posts Plugin for WordPress, Blogger...

About Pepper

I am a single working mom, trying to raise my kid the best way I know how. Join me as I navigate my way through the jungle that is Single Mom-hood, armed with rose-colored glasses and strength of spirit. As pepper adds spice to food, so does my daughter add spice to my life. She makes life no less than…PEPPERRIFIC!

Catch me on G+.

Comments

  1. These are the very important tips if you want to live your life with more enjoy then you should start saving money from today onward other wise your after retirement life can totally spoil.

  2. I’m guilty about leasing. I believe having and maintaining my own car is more costly. Plus, a brand new car’s market value decreases the moment you drive it. Also, I’m constantly moving countries and selling my own car is such a hassle. Leasing gives me a bit of freedom.

  3. I agree with you especially with the use of credit cards. It looks cool to have the credit card but we have to be wise in using it. Even we have that money in the credit card, that doesn’t mean ‘that’s your money’ remember that you owe it to the bank. And if you have cash to purchase something you ‘need’ then just use cash…stop borrowing to avoid unexpected interest…:-)

  4. Marriage and Beyond says

    Great points, you got here. I was raised to abhor debts at all costs. I’ve gone allergic to it at some point. We all should be good stewards of our financial resources and make the interest rate work for me. :)

  5. The number one is really a big trap. Leasing is not good ultimately. you really should try to buy your own car.

Speak Your Mind

*