I admit, it’s fun to spend. Whether on a new gadget or eating out at a new restaurant, getting rid of your hard earned money can be very rewarding. The way you manage your daily expenses depends on you, but there are some things you should never be in debt to.
Going into debt
You can convince yourself that going into debt for certain items is worth it, but we are not talking about a mortgage or a student loan. We focus on the things you think you deserve or want, but are not prepared to wait until you have enough savings to allow them.
You will not believe how many times I’ve heard people convince themselves that vacations are necessary, even if they can not afford to afford them once they get home. Does any of these excuses seem familiar to you?
“My wife and I have not had time alone together for a while so we need this break”
“My work is causing me a lot of stress and a vacation is exactly what I need to get back on track”
“I had a good deal on the flight, so I could not refuse”
I certainly understand that you want to spend time alone with your loved ones or that you can be stressed by work and need a break. I also like a good deal on a flight, but if you do not have the money to pay for your trip, how does that help you? Yes, you will have incredible memories, but you will also have debt and potentially more stress.
Have you heard the story of the girl who accumulated $ 10,000 in debt because she wanted to be an Instagram star? It sounds ridiculous, but it really happened. Lissette Calveiro, 26, of New York, broke up trying to maintain her image in social media.
The cost of new clothes, luxurious vacations, and eating at the hippest restaurants broke her down, but at least she had some cool photos on Instagram, did not she?
It’s ridiculous to think that there are people out there spending money to try to become famous, but let’s be realistic, in the world of reality TV and social media, everyone would like to be part of action. The problem is that most people do not go there.
Okay, we would think that going into debt in an emergency would be worth it, but there are a few things to consider. What kind of urgency are we talking about here? Are we talking about your computer slowing down or replacing the battery of your car? If it’s the last one, it’s a legitimate emergency, but should not you use your emergency fund instead of getting into debt?
Some people prefer to use their line of credit or credit card as an emergency fund, but that makes no sense. Essentially, you go into debt to get out of your emergency, which will create a separate problem since you will have to repay that money. Park your emergency fund in a high interest savings account or in a tax-free savings account and use it only in a real emergency.
Want a better savings account?
I know that weddings are expensive, but that’s not a reason for getting into debt. You might be able to justify it by saying that the cash gifts you receive from guests will cover most of your costs, but that’s still not a good reason to go into debt for your big day. There is no guarantee that your expenses will be covered by your guests, and do you really want to start the next stage of your life in debt?
If you do not have the funds available, you will have to reduce your expectations. This big wedding is perhaps no longer an option, nor this honeymoon in the Maldives that has always been your dream. Stay true to what you can afford and plan accordingly.
With regards to birthdays and holidays, gifts can quickly become extravagant. Some children have very expensive items on their wish lists while some donors think that the more you give expensive gifts, the more love you will have in return – this will not be the case.
Your family will love you no less because you have not given them a specific gift. Children may have a tantrum, but they will still love you. There is nothing wrong with giving gifts, just make sure you have a tight budget to avoid getting into debt.
The final thought
With the exception of medical expenses, there’s not much going on in debt, no matter what your justification. There is nothing wrong with loading the majority of your purchases on your credit card as long as you pay the full balance each month.