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Ways to Make Your Financial Problems Worse

by Bonnie Spain

Stressed out woman

The top ways for you to complicate their financial problems are:

Seeking advice from friends and family.  This usually does not work, because most people don’t tell their friends and family the whole story.  Therefore, the advice is based on incomplete information.  In addition, while everyone has an opinion about what you should do, very few people are trained to analyze your finances.  Most people will provide advice instead of telling you they don’t really have an answer. Many times, their advice will not help you resolve your problems and could make your situation worsse.

Trying to borrow your way out of debt.  You simply cannot borrow your way out of debt.  You’re just trading one debt for another. In rare instances, a consolidation loan will work, but only if you are willing to make changes in the way you manage your finances.  Otherwise, you end up trading unsecured debt for secured debt – but you’re still in debt.

Getting high-interest loans. These loans are a worse alternative than getting a consolidation loan.  Too many people take out short-term high-interest loans only to find they cannot repay the money because the interest and the amount of money they have to repay is so high. They get stuck in a debt cycle that makes their financial problems even worse. 

Seeking the services of a debt settlement company.  Debt settlement companies promise to eliminate your debt or cut it in half.  Unfortunately, using debt settlement services causes far too many people to end up with bills that are further past due. As a result, these people incur more late fees and penalties, increased interest, more debt and ruined credit.    

Borrowing against a retirement account. This is something that should only be done in rare instances, after you have gotten advice about your other financial options. You will have to pay far too many fees and taxes to make this a worthwhile alternative. Your retirement account should be saved for your retirement.   

What should you do?
When you decide to address your financial problems, make sure the steps you take are actually going to resolve your financial issues and not make them worse.  Seek some professional advice to get you moving in the right direction.  A non-profit accredited credit counseling agency is a good place to start.  The appointment will either be free or for a low fee.  A credit counselor will ask you a number of questions to find the best options for your particular situation.   Your credit counselor’s advice can help you make decisions that will solve your financial problems, instead of complicating them and making them worse.