In my blog over the last year I’ve provided many tips on how to save money and avoid the financial traps that can lead to bankruptcy. Unfortunately the world is full of opportunities for you to give up your hard-earned money unwisely. With the current pandemic creating much fear and uncertainty there are even more dangers out there. Don’t be a sucker! Be informed!
Becoming an informed consumer is a big step toward avoiding these minefields—and developing the financial power that will keep you out of debt trouble.
Here are some tips for today on how to avoid money traps.
Avoid the “Free” Trial Offer. It’s said the best things in life are free. But maybe not. Ever wonder why businesses are willing to offer that free trial? Sure, it may build customer loyalty and maybe you’ll happily become a repeat buyer. But companies know that many of us will never read the fine print and they make no attempt to remind us when the free period is over. Instead your “free” subscription or service converts to a paid one. You are left with an unwanted monthly expense and now they have a steady revenue stream. Your loss is their gain. And since they use credit cards to secure these “free” offers, the interest you’re paying each month amounts to an even greater loss to your bottom line. And many companies make it virtually impossible for you to cancel these offers, so that simple one-second click takes hours of phone calls and emails to undo. They are making a calculated bet that you’ll get frustrated and give up, but you simply can’t afford to do this.
Second, never buy something just because it’s on sale. Taking advantage of sales rather than satisfying a real need can instantly sabotage your monthly budget. Just because you have a coupon or the opportunity for a great deal doesn’t mean you need to act on it — especially if the good deal is for something you would not otherwise purchase. Be a buyer, not a shopper. Make a list of what you want before you go to Costco or the mall and stick to it. And leave your credit cards at home. You’re less likely to splurge if you use only money you have—either in your pocket or on your debit card.
Third, say no to upgrades and add-ons. We’re constantly bombarded with them—do we want more insurance coverage on the car rental? Do we want a warranty on our laptop? Do we want a bigger size at McDonald’s? Fast food, electronics, retailers, car dealerships–upgrades make for huge profits so companies really push them. To avoid this trap, do your homework. Know ahead of time what you really want. For example, quiz your insurance agent about how much your own insurance covers you in a rental car. If you later decide an extended warranty or other add-on is appropriate, fine. If not, just say NO. And stick to it.
Fourth, stay away from payday loans. These are being advertised these days by well-known celebrities as if they were a community service. And they appear very attractive—who hasn’t needed some ready cash on a moment’s notice? But such loans involve great financial danger. They have mega interest rates—often 100% per year. And they’re hoping that instead of paying the loan in full in a week or two, you’ll instead roll the loan over, with new loan charges. This can easily be the beginning of an intractable problem. I often see folks with multiple payday loans who have no hope of getting out of them. It is shame when such folks find that bankruptcy is their only answer. So in a financial pinch, sell some unused items, work some extra hours, but avoid payday loans at all costs.
Finally, never co-sign for others. Ever. Well, maybe for your mom. But your best friend or even your brother can lose their job, and when they do that car will be repossessed and the bank will be coming after you—for the entire unpaid balance. The myth that you’re only on the hook for half is just that—a myth. So the next time you’re asked to co-sign a loan, blame it on me—tell them that a lawyer told you not to.
Folks, with virtually everyone adversely affected by the pandemic, financial hardship will be a common plight. Hopefully the economy will recover swiftly enough that everyone can regain employment and get back up. If it doesn’t, or if you have a special situation, we are always available to discuss how bankruptcy might be a solution. There is no charge or obligation to speak with an attorney at our firm. Please call us if you have questions. 831-424-1764.
Categorised in: Saving Money
This post was written by Cypress Coast Law