Ghost stories, haunted houses, and classic scary movies are all part of the October fun, but a horror that’s not so exhilarating? Financial mishaps. In honor of Halloween, here are some familiar financial horror stories and how you can avoid experiencing them.
Everywhere you look online, there’s a new financial trend of the week— a new NFT, stock, or collector’s item seemingly making people millionaires overnight. But just as often, we hear of those who buy into these short-term crazes finding themselves in large amounts of debt, owing investors massive sums, and left with virtually worthless assets.
While investing in trends can (sometimes) be worth the financial pay-off, conducting plenty of research is essential before hopping on board. Be sure to ask yourself if an economic trend truly serves your values and goals or if you’re simply taking a shot in the dark, hoping to get lucky. In addition to self-assessment, it never hurts to ask a trusted second party like a spouse, family member, or financial advisor if the investment you’re planning to make is rational and worth pursuing.
Though plenty of horror stories involve credit cards, one of the most common is missed payments burning large holes in people’s pockets. With many of us owning multiple credit cards combined with the hustle and bustle of everyday life, it’s easy to miss a payment or two every so often. Unfortunately, even being a day late on a credit card payment can cause damage to your credit score, incur late fees, or lead to higher interest rates.
Luckily, this common scare can be avoided with a little organization and diligence. Plenty of banks allow you to automate your credit card payments so that a certain amount is paid to your cards on your selected payment date. Alternatively, consider creating notifications on your smartphone calendar to give you a gentle reminder when the time to pay your credit card nears.
We all fall on hard times, and sometimes we need to accept a loan to get back on our feet. But unfortunately, not every lender out there has our best interest at heart.
Payday loans are loans with a small amount of money to support you from one payday to the next. Though the concept seems harmless enough, these loans often come with a massive interest rate that can rack up enormous interest costs that make your amount owing much higher than the initial loan.
One effective way to avoid falling into the trap of a payday loan is to create a solid emergency fund so that you have money to fall back on in case of an unexpected life event. Alternatively, if your current financial situation calls for a short-term loan, read the fine print detailing potential fees and interest rates, and have a solid repayment plan before you borrow any money.
Check out our previous blog post on 3 Financial Planning Tips for a Brighter Future. In addition, if you need personalized financial advice, our team is always here to help—contact us today to book an appointment!