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If You’re Taking Out a Loan for These Reasons… Then You should Think Again!

Loans & Credit

People often approach banks for loans due to home repairs or car purchase or business loans, but recently a few desperate folks approached banks for crazy personal loans. Approaching a financial institution or bank for a cosmetic or plastic surgery loan or even repaying back your credit card debt are some weird examples. People are so addicted to shopping that they often have to borrow money from the bank, a friend or a Credit Card Company for some stupid purchase. Here’s why YOU should avoid them!

Wedding:

As it is a wedding season, this reason tops the list. People insist on classy and expensive weddings, despite their pockets not being able to sustain it. But many couples don’t mind starting their lives with a major debt on their hands and approach credit card companies or banks or to come rescue them.

Loan meant for a friend:

At times, a girlfriend or a boyfriend takes loans for their may-be spouse, without thinking about a breakup between them. If lending money to a friend, consider that money as a gift, without any paybacks; consider yourself lucky if you get a payback. But a loan for your girlfriend is a total blunder because if they split up, the person who bears the loan liability, legally has to repay it.

For festivals:

In USA, every year hundreds of people take loans during Christmas and this is not an intelligent idea. Such stupidity makes your financial status worse. Instead of sad faces of your children on Christmas morning and rushing for a loan, do try and plan ahead for it. You could save money by monitoring expenses during the year and save enough for Christmas purchases.

Investing in stock markets:

It just does not seem that that you’re taking a loan for unpredictable returns. Stock market investment is for those with extra bucks in their pockets and who take chances on losses. You cannot justify taking debt to become more indebted. Instead of loans for stock market gambling, have a decent job, earn some money, save it and thereafter invest in stocks after planning future expenses.

Pay Day loan:

Why take loans and pay the interest till your next salary? Instead why not save some money from your pay, spend wisely and avoid being indebted.

Plastic Surgery:

People take loans to invest in ventures to cover the loan amount and the interest payments. But can you pay back after taking a loan for a plastic surgery procedure, unless your job pays you extra for your enhanced looks? There is no rationale for such irrational financial planning.

The pre-retirement loan:

People in US opt for a pre-401K loan and borrow money out of their retirement plan which the government-mandates for every citizen. This act is very disappointing as this makes you underprivileged but also takes away your retirement security. Funds from this retirement arrangement are not taxed until withdrawal, and an early withdrawal penalty (10%) is levied on the amount withdrawn. This stupid decision often lures people into very complex tax situations.

Vacation Loan:

Vacations are great stress busters, but why start a stress-busting vacation with a debt? But the shocking fact is that more people do this without giving a thought about landing in a critical financial hell. They can never be stress-free on a loaned vacation. It’s better to work hard, save money and then plan for holidays.

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