6 Items You Should Never Borrow Money to Purchase
Western society embraces a “Keeping up with the Kardashians” mentality. The appearance of wealth, luxury, and extravagance is often more desirable than living a life of hard work necessary to build wealth and contribute to society. With the ease at which credit can be acquired, it can be tempting to borrow for a variety of purchases that can harm your financial position.
Generally speaking, borrowing for a house, your education, or perhaps even a vehicle can be beneficial. Of course, you must always thoughtfully approach any decision to take on additional debt. However, the financial return that can come from real estate, schooling, and a mode of transportation make these purchases not only luxuries, but investments as well.
Meanwhile, there are some items that you should never borrow money to purchase. Despite the apparent urgency that surrounds a few of these purchases, learning to wait or lower your expectations will undoubtedly save you money, and likely many headaches, in the long run.
Never borrow money for the following purchases.
Spending summer on the lake is a lot of fun for the entire family. Soda, swimsuits, and wakeboarding make for a great afternoon. However, borrowing for a boat can put you back a significant amount – especially once you add the cost of registering, insuring, storing, and launching the boat.
There are many options that can prevent you from needing to borrow to purchase your vessel. If waiting until you have enough money doesn’t sound appealing, considering buying a used boat, buying a boat with friends, renting, or borrowing for your days on the water. Although these options may not seem as exciting as buying new, it will certainly save you money over time.
Similarly, ATVs, dirt bikes, and other big toys should only be purchased once enough money has been saved up to pay-in-full for the purchase. It can be difficult to wait patiently for something that you really want, but it can be amazing how much more enjoyable something is when you save up for it. Furthermore, while a $5 spontaneous purchase may have little effect on your finances, a $5,000 purchase certainly can. By saving up for a large purchase, you don’t make it until you are absolutely confident that the purchase is the right decision.
It’s becoming more frequent for brides, grooms, and parents to take out huge loans to pay for extravagant weddings. If you think about it, however, the last way you want to start off your married life is with a mountain of debt. Find creative ways to reduce the cost of your wedding and use your credit to purchase a house. Twenty years down the road you will certainly be happy with your decision to invest in your future rather than in a show that cost you an arm and a leg. Of course, you should make your wedding beautiful – but there are many ways to do this without breaking the bank.
An Engagement Ring
Even worse than borrowing for a wedding is borrowing for an engagement ring! If your girlfriend will only marry you if you spend $10,000 on a ring, then maybe you better take a moment to rethink if she is the girl for you. Love shouldn’t have a price tag – and if it has one from the beginning, you may be in for a lot of trouble. You certainly don’t want to find yourself, five years from now, still paying off an engagement ring for a woman who left you because she found someone with a bigger bank account.
The need to take the family out to enjoy the summer may make it tempting to borrow for that “perfect” vacation. However, this is a very poor financial decision. Rather than borrowing for this summer’s vacation, keep it simple and start saving the would-be payments for next year’s vacation. You will actually end up with more money for next summer’s vacation, and all future vacations, then you would have if you borrowed for every trip and paid the additional interest fees.
Furniture or Appliances
Unfortunately, there are many stores that offer financing for everything from couches, to HDTV’s, to washers and dryers. Although the pleasure of immediate gratification can make these purchases tempting, in the long run, most of these purchases will result in a tighter financial position. The only purchase that may be worthwhile would be for a washer and dryer – eliminating the need to spend money at a Laundromat.
Managing your finances can require a lot of discipline. However, learning to patiently save will result in a more secure and comfortable financial future.