Remember when you were really young and your parents use to beat you mercilessly put you in timeout when you got in trouble. For example, I remember saying ‘piss’ in front of Mom Ninja for the first time. She was not pleased with my potty mouth so she did what most mothers do. She threw me down the stairs…just kidding… She made me wash my mouth out with soap. But, instead of the normal squirt of liquid soap on the tongue, she took it one step further. She took a bar of soap, made me put it in my mouth, and bite down on it for a good five minutes while I was in “time out”. She was ruthless. You’re lucky mom I didn’t call child protective services on you for a clear violation of my constitutional right to free speech 🙂
Just like I got sent to timeout for bad language, I think people should be given timeouts if they violate some of the fundamental financial principles. Just imagine, Joe purchases a television from Best Buy and finances it at 15% interest. Enter Personal Finance police. It’s time for them to smack Joe around a little bit and put him in financial timeout. In said timeout Joe would be required to reflect on his poor decision to finance a TV in hopes that he does not make a similar mistake.
Okay, maybe PF police wouldn’t really work out. I guess we all have the God-given right to make stupid financial decisions. Instead of threaten you with a timeout, how ’bout I just walk through some of the more important financial NO NOs?
No No #1:
Don’t borrow money at an unreasonably high interest rate. Let’s face it, sometimes you might have to borrow money (to buy a house or take out a student loan), but that doesn’t mean you need to go charge everything on your credit card, take out payday loans, and take out a second mortgage. High interest debt is going to absolutely destroy your wealth building potential. Unless it is an absolute emergency, put the credit card down (if you aren’t paying it off in full that is).
No No #2:
Never, ever, ever lose track of your money. Have you ever had a $100 in your wallet and a week later notice you spent it all, but have no clue what you bought? It’s really important, and extremely beneficial, to track your spending habits. There is plenty of free budgeting software that will make this super easy for you. All you have to do is sync up the software with your bank accounts, keep any receipts from cash purchases, and the software does the rest. Want to know how much you spend dining out each month? Boom. The software lays it out nicely for you. I bought Quicken a few years ago and it has totally helped me gain some insight in to my spending patterns.
No No #3:
Don’t get scammed. You know the old adage: If it’s too good to be true, it probably is. There are plenty of people, and companies, willing to take your money from you. Enemy of Debt posted a few weeks back about a Craigslist scam he almost fell victim to. Need another example? You know that catchy tune; “F-R-E-E that spells free, credit report dot com bab-y”. It’s a catchy tune, but nothing about freecreditreport.com is free. If you want a legitimately free copy of your credit report go to annualcreditreport.com (government sponsored). There is a wealth of information out there to help you determine what the best credit report monitoring service for you would be. Don’t get SCAMMED by some dude with a guitar and a catchy jingle.
No No #4:
Do not, I repeat DO NOT, forget that your money is suppose to be spent. It’s not uncommon for me to become so obsessed with saving my money I forget I’m allowed to enjoy it. There is nothing wrong with a little non-budgeted spending every now and again. Sometimes it feels good to cut loose and splurge 🙂 Don’t be the awkward cat lady that has $10,000,000 in the bank, but refuses to go out to dinner with her family because it’s a waste of money. Live a little.
There’s probably a dozen more financial NO NOs that should have made the list, but I’m too lazy to write them all out. So, I’m gonna ask that you faithful readers help a Ninja out and throw down some more NO NOs in the comment section below. Maybe buying a new car is a no-no? Spending more than 50% of income on housing? Borrowing money from friends? Let me hear what you got!