Financial Nightmares to Avoid

Four things that can make you fear your finances

financial-horrors-headEveryone has a fear: heights, snakes, spiders, the dark, failure, clowns…any or even all can lead to sweaty palms and racing pulses. While many people say that facing your fears is the best way to conquer them, the following are financially spooky things you really should try to avoid (much like I do tight, enclosed spaces).

  • Zombie Credit Cards—Paying the minimum on your credit cards is like trying to kill a horde of zombies: oh, sure, you might be okay at first, but they’ll eventually catch up with you. Even a few thousand dollars can take a decade or more to pay in full. The best way to destroy these is to pay as much over the minimum as your budget allows.
  • Ghostly Emergency Savings—The thing about ghosts is that they’re often not really there. Unfortunately, that’s also the case with the savings of too many people. Having an emergency savings account of at least $500 (preferably six months take home pay) can keep you from using credit for emergencies (e.g. car repairs) and help you stay out of any monetary graves.
  • Haunted Home Equity—Far, far too many people used their homes as ATMs, withdrawing the equity they had built up to that point. But when the housing market (and, in conjunction, housing prices) dropped, they found themselves hounded by the Home Equity Loan of Doom. You should really try to maximize equity by paying down your mortgage sooner (but not before your credit cards); this will give you much more flexibility if you need to move and keep you from being “underwater” (owing more than your home is worth).
  • Nightmarish Payday Loans—You might have thought getting that $500 from some fly-by-night online lender was quite the treat. Well, until you didn’t have the required $550 needed to pay it back within two weeks, which caused you to roll it over into another loan…and then another…then another… Yes, payday (and car title and refund anticipation) loans were banned to American military personnel and their dependents, but that hasn’t stopped online lenders based overseas from offering them, nor service members from getting them. They were banned for a reason, so avoid them like some chainsaw wielding psychopath.

Keeping clear of these four financial horrors can keep your finances from being buried and left for dead. 


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