One of the reasons that we are in the current financial mess as a country, and we are on the brink of a $700 billion bailout for Wall Street financial firms, is out of control debt behaviors. Personally, I think that the blame is pretty evenly split between the government (Dems and the GOP, Congress and the Administration), greedy businesses and investors, and out of control consumer spending fueled by debt.
While at this point there is not much you can do about what the government does (although becoming politically active could help later on) or what businesses do (aside from shareholder stuff if you invest), there are some things you can do in your own life to change how you manage your finances. Free Money Finance offers 7 borrowing behaviors that can lead to lifelong fiscal problems:
- Payday loans.
- Car title loans.
- Tax refund anticipation loans.
- Stock bought on margin.
- Co-signing someone else’s loan.
- Taking out a loan for a lavish wedding.
- Home equity loan.
I though #7 was interesting, since many people consider an equity loan a smart move. While many people think of a HELOC or other home equity product as an emergency fund or a quick way to pay of consumer debt, this is rarely the case. Free Money Finance makes this point:
They say that if you’re borrowing on your home equity to pay off a credit card, then that’s probably a sign that you’re out of control with your spending. Why? Because you’ll pay off the cards and then likely run them back up again. Then you have credit card debt AND equity taken out of your home — a double whammy
I heartily agree. In order to overcome consumer debt, it is important to change your spending habits and the way you think about money.