Knowing the Financial Consequences of Your Decisions

February 16, 2013

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Seemingly simple decisions in life can produce negative results that impact you financial stability, and it helps to know the right decision from the wrong when you make your choices.

There is no arguing the fact that if you restrict the bulk of your transactions to cash you can save upward of 20% on monthly expenses, to begin with. But there will be occasions in life where decisions like purchasing a home or pushing your child through college will require credit, and unless you show sufficient history of taking loans and repaying them correctly to create a good credit score, lenders will be reluctant to open their lines of credit.

Rushing to the lender to make your loan payments in cash each month on or before the due date may seem to be the ideal way of enforcing financial discipline, but there are better ways that are more accurate and save your time. Connecting your checking account to an automated payment system will ensure that lenders get their payments on time without delay, and without missing installments.

Very often your land phone, cell phone, and cable as well as internet services can be packaged together under a single service provider to save expenses, but the whole process can become counterproductive if you move to more expensive tariff plans that drain your resources.

A financial guarantee or assurance of payment can have serious consequences. If you are thinking of helping someone out by cosigning his loan please understand that you are equally liable to pay the balances outstanding if that person defaults and becomes incapable of paying his loan. So you can stay safe by not committing yourself to loans or guarantee payments that you yourself can’t fulfill. A polite no at the outset can save you many headaches down the road.

The entire purpose of a credit card balance transfer is to move you to a lower rate of interest that will help you accelerate the repayment of the original balance. The problem lies in the fact that the zero interest offer and interest moratoriums that enticed you into accepting the package may be withdrawn some time later. If you have charged more expenses to the new card in the interim, you would be reverting to the same high outstanding, high interest situation you faced earlier.

Reward cards have the potential of spoiling frugal spending habits. The problem starts when you are required to spend increasingly higher amounts to progress to more rewards, and this could spiral beyond control and ruin your budget.

Closing lines of credit or accelerating payments does not necessarily boost your credit rating. Remember that a credit rating takes into consideration the extent of credit utilization when compared to your approved limits. Maintaining good debts regularly paid for longer periods will impact your score positively, just as keeping bad debts off the record.

Instead of frequently overdrawing your account for sundry purchases try and analyze the reasons why you are spending too much. There may be many areas where you can cut costs and save money to fund essential purchases, instead of depending on your credit card to bail you out.

Financial decisions. Piggy bank

Freezing your account may be the ideal way of blocking yourself from overspending and preventing identity theft, but the service provider will be extracting fees for this service and it may also have the undesirable effect of preventing your insurance company, landlord, employer, cell phone operator, and utility companies from accessing your credit file for reviewing your credit. Reopening the account will also be time consuming and may deny valuable credit in emergencies.

Many emergencies need substantial cash to see you through them and loans for vehicle title can save your skin time and again. Cash loans for title are easy to avail and there are no credit scoring barriers to block access to them. Getting up to 60% of your vehicle’s worth is the car equity loan guarantee, and you can get this simply by allowing a lender’s lien on your car title slip. A 25% APR interest cap and flexible repayments that don’t strain your income, are other benefits of the pawn car title loan.

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