Don’t go into debt to pay for these 5 things

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Through Kurt smith

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In some cases, borrowing money helps build wealth. Most people need a mortgage to buy a house, for example, and student loans provide many people with an education that leads to a career.

But in other situations, getting into debt does more harm than good. When you are pay off the debt – and the interest that goes with it – you give someone else money that you could save. In other words, debt repayments are money that you don’t invest in your future.

Charging that new computer or that new purse might seem harmless, but if you can’t really afford it, you’ll get into debt – and debt constrains you financially and ultimately limits your future.

Above all, we must avoid going into debt to pay for these five things:

1. Vacation

No matter how much you need a break, it’s not worth going into debt for a vacation. Yes, you’ll return to work with enviable photos on your smartphone, but you’ll have to put in a lot of hours to pay for the trip. Worse yet, paying off your debts will hamper your ability to save for the unexpected. If you are fired while still making payments, you could be in a bind.

Holidays should be rewarding and rejuvenating. But going into debt for an amazing trip will only increase the stress after you return home. The memories could last, but so would the bill.

2. Gifts

People often toss financial prudence to the wind during vacations or on special occasions. It’s easy to justify spending to create magical memories – and it can be hard to admit it when you can’t afford the gifts on your family’s wish lists.

Remember, your kids won’t love you more or less because of the great gifts you give them. They could, however, learn more about sacrifice and budgeting if you lead by example. Isn’t that better than any long-term plush stocking?

3. Clothing, shoes and accessories

Retail therapy is a reality for many men and women. People buy things in the hopes of portraying more confident, assembled versions of themselves – and sometimes it’s hard to walk away from a good sale. There is nothing wrong with shopping. But when you rely on things you can’t afford to feel good, it becomes a problem.

Avoid charging anything to a credit card that you can’t pay right away. Looking fabulous while in debt doesn’t improve your life. This makes it heavier.

4. Gadgets

No one needs the latest Apple portable or noise-canceling headphones from Bose. But you might be thinking “This new smartphone will keep me organized” or “The robot vacuum will mean I have to clean less. The point is, you accomplished these tasks before these gadgets existed, and having the latest technology isn’t going to change your life that much. Worse yet, the next most important thing is likely to hit store shelves before you pay for your new gadget,.

5. Weddings

You and your partner may have dreamed of your perfect marriage, but you shouldn’t have to go into debt to make it happen. A 2014 study by researchers at Emory University in Atlanta showed that couples who spent more on their marriage had shorter marriages than those who cut costs.

This is understandable. Starting your marriage in debt causes stress for both partners. And couples who focus on the event rather than the relationship may lose sight of why they wanted to get married in the first place.

Debt cycle

Spending money on material objects or extravagant events will not change your life in a meaningful and lasting way or make that depressed mood go away. Eventually the novelty will wear off or the event will end and you will want to buy or plan something new and exciting, which will start the cycle of debt again.

The next time you’re tempted to go into debt to buy something, remember that cycle of debt and practice self-mastery instead. Learn to budget and save for those desirable items, getaways and events. It is the only real path to financial stability and peace of mind.

Kurt smith is a financial and relationship advisor at Consulting and coaching Guy Stuff.



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