What Would 60 Year Old You Tell Yourself about Being in Debt

this post answers the following questions
1. Why avoid credit card debt?
2. Is borrowing an alternative way?
3. What is renting yields no returns?
4. Is a short term loan a welcome solution?
5. What is impulse purchases?

What would you tell you now…years from now?  You’re likely to remind you to listen to your elders to start.  What else?  Well, money is a ‘must’ concern for us all.  If you, years in the future, could sit down with you now, or the younger you, what words of financial wisdom would be offered?

Particular maxims connote ‘wisdom is the best teacher.’  If that’s true, what would the white-haired, wisdom-wizard version you say?  For instance, is it okay to borrow money?

Image courtesy of Images_of_Money from Flickr

Avoid Credit Card Debt

The ‘want now, get now’ sentiment of credit cards is incredible.  “You mean I get what I want now!?”  That’s very convenient.  It’s also very financially dangerous.  It’s incredibly convenient for large purchases.  However, it’s too easy to use credit with smaller purchases, smaller purchases which amount to a lot of debt.  Paying the principle each month would be fine; but most don’t do that, accumulating interest on top of principle.

Avoid credit debt at all costs.

Borrowing Is Okay

Hey, in an ideal world, we would all have ‘enough’ money at all times.  Life keeps things interesting; it’s not always ideal.  Therefore, borrowing money is a sometimes need and ‘okay’ alternative.  Think about borrowing money from family and friends first, especially if ‘interest’ is not involved.  However, respect friends and family as you would a financial institution.  Don’t leverage relationships for excuses to extend the time of repayment.

Borrowing is okay; but don’t take advantage of personal relationships.

Renting Yields No Returns

Renting, like using credit, is convenient.  In the short term, one can afford equipment, living areas, cars, and other needs/wants without having to purchase outright.  However, renting yields no returns, meaning buying solidifies ownership and the ability to resell…and make money back.  Think about the long term.  Short-term conveniences are often engineered at the disadvantage of the ‘renter.’

Consider renting a house for a year.  The situation hardly warrants any bulk up-front investment; yet that money put forth is never coming back.  Conversely, house ownership, though usually involving a down payment, also offers similar monthly payments to renting; but now you’re investing in the purchase rather than merely renting.

Short Term Loans

Short term loans (sometimes called bridge loans) are quick solutions to viable money emergencies.  Depending on the time and amount of money involved, terms and rates of interest vary.  However, sometimes short term loans mean the difference between pursuing two roads.  If a person is in a situation where immediate funds is a necessary need to ‘bridge’ oneself to a better place, then short term loans could be a welcome solution.

Impulse Purchases

The ‘here and now’ of situations often take precedence over long-term-saving strategy.  Consumer ‘signals’ are everywhere, both on and offline.  It’s very ‘easy’ to be a consumer.  It’s much harder, on a day-to-day basis, to be a ‘saver.’ Take a step back and think before adhering to buying impulses.  Ask, “Do I really need this?”  Most times, the rational answer is, “No!”

That ukulele you bought in Hawaii you plucked once, a wise decision?  How about that summer-fun skirt you ‘had’ to have?  It must have looked better on the mannequin; you’ve worn it once!  What about that juice machine the TV-ad person was raving about?  It’s not ‘all-the-rave’ in your household, residing in the back of the cabinet, is it?

Conclusion

Listen to your elder self…now.  Start thinking about saving; think about ‘now’ solutions such as short term loans, or the availability to borrow money from family members.  The future starts…right now.  Wouldn’t you rather have the now you tell the future you, “Pff, (gives dismissive hand wave) I already know about that stuff!”

Author Bio | Amie is a finance coach, writing for sites like www.wonga.com– short term loans provider. She enjoys reading and writing a variety of topics about personal finance especially about topics relating to money.

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