While borrowing money to purchase a home, get an education or buy a new automobile are (relatively) smart financial decisions, there are a number of items that a person should never borrow money in order to purchase. While the urgency to do so is definitely there, the fact is that saving money to pay for these purchases rather than borrowing for them is a much more intelligent financial decision and will lead to many fewer headaches in the future.
For example, borrowing to buy a boat might seem like a great idea. There’s no arguing that spending time on the water with friends and family is a lot of fun, very relaxing and quite enjoyable. The problem however is that it’s not only the cost of the boat that is significant but also the cost of insuring it, storing it, registering it and launching it every single time.
The same can be said for an ATV, a dirtbike and other “big boy toys”. While waiting patiently while you save enough money to purchase an ATV or dirtbike might be difficult, purchasing one with cash will save a lot of money in the long run and is amazingly much more enjoyable. Besides that, a $5000 (or more) purchase can have a huge effect on your finances.
Although it certainly seems to be trendy as of late, spending an inordinate amount of money on an extravagant wedding simply doesn’t makes sense. Think about it just for a moment; is it really a good idea to start off your life together deeply in debt? While that one “special” day might seem like a good idea now, 20 years from now the extra money you have in savings or in a retirement account will seem like a much better idea. Yes, your wedding day is a special day but do your best to find ways to lower the cost so that it doesn’t end up being a day you look back on with regret due to financial difficulties.
Speaking of weddings, borrowing to purchase an engagement ring is, no offense, a terrible idea. Love, simply put, should not have a price tag, and if the girl you intend to marry will only say “yes” if you spend $10,000 on a shiny rock, it might be time to look for another girlfriend.
Borrowing to go on vacation is almost as silly as the last two purchases. Yes, spending time with your family and loved ones is important, but if it puts you into the poor house or causes you financial difficulty for years to come it’s simply not worth it. Borrowing and waiting make much more sense, especially if you consider that you will actually have more money if you save for your trip, and future trips, if you don’t have to pay for interest fees on the loans you took out for this one.
Lastly there are furniture and appliances. Today it’s easy to find a store that will finance everything from big-screen TVs to sofas, washers and practically anything else. Of all of these items, maybe the only two worth borrowing for are a washer and dryer because of the time and money they will save you on going to the laundromat.
Is it super easy to make these decisions? No, because we humans tend to want “instant gratification”. Financially however, borrowing on these six items simply doesn’t make sense, will cost you much more in the long run and could ruin you financially. Practice patience and be a diligent saver and you should be able to purchase these things with cash and put a lot less stress on your finances.