The world's most popular brainiac, Albert Einstein once defined insanity as "doing the same thing over and over again and expecting different results." Einstein's theory on this doesn't require a Master's degree to grasp. If you've ever been on the hamster wheel of debt, like me, you've experienced the craziness of wishing and hoping it would all just go away. (It's more like it returns with muscles!) I took the blinders off and reviewed my banking and credit statements. It wasn't hard to spot my biggest three financial blunders.
1. Payday loans: Payday loans were my dirty little secret. Hubby hints that a night out of town together would be nice... I head to the payday loan store. Tire goes out--need a pair of shoes? Yep, you guessed it. Paydays loans were quick and easy. And super-expensive! The Federal Trade Commission advises consumers to avoid these kinds of high interest loans. In a recent consumer warning the FTC says, "A payday loan - that is, a cash advance secured by a personal check or paid by electronic transfer is very expensive credit. How expensive? Say you need to borrow $100 for two weeks. You write a personal check for $115, with $15 the fee to borrow the money. The check casher or payday lender agrees to hold your check until your next payday." That explains it perfectly. Fortunately, I was able to secure a small bank loan and cashed out of my payday loan disaster. I swore never to take on another one. So far, so good.
2. Pawn stores: Another convenient spot for extra cash are pawn stores. It quickly became a bad habit. Pawning the extra television from the guest room cost me twice as much as it cost to purchase it. Also, picking up "deals" like a telescope for the kids or volumes of DVDs from my fav pawn store hit my wallet hard too. I gave up pawn stores.
3. Family loans: I'd always hear it, but I never really listened. "Never loan money to family members." I know how it feels to be the borrower and the loan department. I've decided that I won't loan money anymore with the exception of my children. If I can't just give it, I won't loan it. My husband and I have squirreled away, (finally) a healthy emergency fund so we'll never have to ask for extra cash again.
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