3 Deadly Financial Traps You Must Avoid At All Cost!
There are so many financial traps that we do put ourselves into even while we are trying to get financial freedom.
Many of these traps are the ones that people fall into every day without even knowing it. The most common and serious traps is what I will be focusing on this post.
1. Early Marriage:
It’s important to know the fiscal situation of the person you’re marrying. I don’t mean just bad credit spouses or gold diggers. But marrying early in general could be a financial disaster for you as well.
By marrying early, I’m talking about under the age of 25, because 25’s when everyone is likely to be all done with college and set on their chosen career.
Here is how it starts;
- First: The couple marries and moves in together.
- Second: The combination of all their stuff creates a scarcity of space.
- Third: Couple decides a bigger place is needed.
- Fourth: More space means they need more stuff to fill the emptiness. So they buy more furniture on credit.
- Fifth: Couple starts reproducing.
- Sixth: They need a car to take themselves and children to work and school so they save and buy one.
- Seventh: They end up struggling for the rest of their lives with all the bills and stashing savings away for their children’s college fund and end up with nothing in retirement.
Now they are in the rat race. They’ve bought two liabilities (a house and a car) thinking they’re assets.
They barely have enough to save for their children’s college, let alone for themselves.
This is why the right age is often estimated to be 25. Early marriage is a key predictor of later divorce.
Nearly half of people who marry under that end up divorced. It’s only 24 percent for people who marry after age 25. And I don’t think I even need to go into what a financial mess divorce can be.
So try as much as possible to avoid this financial trap.
This final trap will probably anger many. But saving in today’s world with today’s money is losing in the long term. You know the rationale behind saving, that it’s best to prepare for a rainy day.
There are problems with that kind of thinking. If you prepare for rainy days, guess what you’ll have a lot of ? Rainy days. Your bank doesn’t pay you very generously in interest on your savings. At best, you can get about 2.5%.
And you can take this fact to the bank with you, no savings account interest rate will ever be higher than the rate of inflation. Furthermore, you’ll have to pay taxes on whatever money you make in interest on your savings. Here is one of the many areas where the government really screws you.
The people getting rich today are not doing it by saving either!
Don’t save your money. Leverage your money. Leverage simply means to do more with less, but not by being cheap. Remember Jesus’ parable of the talents? That was leveraging money. Leveraging money is taking $100 and turning it into $150.
A good idea that almost anyone can do is become a lender. Another financial traps you need to avoid starting from today. After saving your money to a certain amount transfer the money into an investment account where it will be yielding better interest like 10-13% annually.
3. Student Loans
The student loan game has changed these days. The cost of higher institution keeps going up and loans are replacing scholarships.
Academic institutions are only worth attending if you can get someone to sponsor you. Some colleges and universities are complete wastes of time dishing out useless degrees that get you nowhere while sucking out your money like parasites. So it’s best to try to get your higher learning for free in the form of scholarships and grant before seeking for loans.
Scholarships are always better than loans.
Too bad, it has become common practice for youngsters to go a head to seek for student's loan without thinking twice. Have you taught of after graduating and you do not get a job?
If you default in mortgage, you can give the house back. But if you default in student's loan, you can't give your degree back. In other words, you must pay it.
So my best advice for you is to avoid it. Better seek for scholarships. Go online and research. They are many organizations on the Internet giving student scholarships even for master's degree.
Avoid these three default financial traps that we sometimes put ourselves in without knowing. It can destroy our plans towards financial freedom.
Your thoughts are welcome in the comment box.