Drastic financial measures can look pretty inviting when you are down to your last penny. All of the hokey, clichéd commercials that you easily ignored when you are in good financial health start making complete sense all of a sudden.
This is exactly what certain unscrupulous companies in the financial services industry count on. Their bottom lines based on your fear.
There are certain actions that might look very inviting When you are in financial trouble, but they are actions that you should never take. This article will list a few of those drastic financial measures to stay away from.
1. Entering a Credit Consolidation Program
Credit consolidation programs are the worst thing to happen to a long-term credit score since bankruptcy. Many credit consolidation programs are completely in the hands and the pockets of creditors. They have no incentive to help you lower your monthly payment for your long-term principal payments. Many of them are quite unscrupulous in their methods. Do not be suckered in by a program that can ruin your long-term credit score.
2. Choosing to Refinance Your Mortgage
Though a mortgage finance may look good at current rates, the truth is that those teaser rates are there to sucker you into a fool’s mate. Banks and other lending institutions are sitting on more money than they have ever had before. They have no reason to offer the “historically low interest rates” that they constantly advertise in the wake of the Great Recession. They do have a reason to fool you into thinking that you can refinance for less money than you pay for your house now. It is simply impossible to do.
3. Taking Out a 401(k) Loan
The first thing that they teach the financial sharks in shark school is never to trade long-term benefits for a short-term emergency. This is exactly what a 401(k) loan does to your finances. You are taking money away from yourself in the future to pay off something in the present. Therefore, you lose the money in the present and in the future. This is the very definition of bad personal finance. Find another way to get the money that you need to pay off short-term emergencies.
You may ask what the real alternative is if you are in financial trouble. The prepaid card is one of the most efficient ways to bring yourself out of short-term debt and build your long-term credit score. If you pick the right prepaid card, you can safely turn your financial situation around without sacrificing your long-term financial safety.
