Sometimes in life, a debt’s juice is worth the squeeze.
Under some circumstances, financing a vehicle makes sense – as long as purchasing upfront with cash isn’t a realistic option. Elsewhere, few people can foot the bill for a home or education directly out of pocket. These make sense because few other purchases represent such worthwhile long-term investments that reward their purchasers in the not-too-distant future.
Alas, sadly too much of Toronto consumers’ outstanding debts are born of paying too much beyond one’s means for things with no lasting or appreciating value. Though there are certainly many more extravagant-albatross expenditures to avoid, we’d like to conscientiously steer you clear of a few commonly financed purchases that are just never worth the debt you’ll ultimately adopt and pay interest on for years to come.
If anyone ever tells you that “You can’t put a price tag on memories” – especially is a travel agent ever says it – calmly scoot in the other direction.
It happens more often than we’d like to admit, and the young and indulgent that think themselves bulletproof against credit catastrophe aren’t always the ones maxing out their credit limits. Families and older adults sin against the sanctity of their credit ratings this way too. A week or two of unforgettable leisure in even the world’s most opulent locales is rarely worth thousands of dollars in debt on maxed-out credit cards to foot the bill. After all, what are you really left with once you’re home? Pictures, souvenirs, and the bills. That’s about it.
Pace yourself. A few summers of conservatively priced vacations paid for with whatever savings you can bear to part with lets you put what you would’ve instead paid in built-up credit card interest toward either a slight
ly upgraded getaway the next year or even a dream trip in a few years instead.
- BOATS AND ATVS
To be honest, this goes for just about any unnecessary recreational vehicle: if it isn’t needed for regular transportation, then it isn’t important enough to go into debt purchasing it, period. Vehicles of any kind rarely appreciate in value.
These are the kinds of things one buys with cash, whether new or used, after years spent saving up. This also gives you time to continually reassess just how dearly you desire a new vessel or vehicle. Also, be honest about how much time you’ll really spend with these toys. If your yearly days enjoying them are comparatively small, consider just renting locally when you want to indulge in some recreational riding, sailing, or fishing.
If the day comes when you do the math and find that owning an ATV, boat or dirt bike would cost far less in the long run than what you pay annually to rent, then lay out a plan to save up and pay in full with cash.
- ENGAGEMENT RINGS AND WEDDINGS
Our reality checks don’t get much more blunt than this one: debt and differing philosophies of personal finance can taint and rot otherwise happy relationship and marriages quicker than couples or their families can realize what they’ve gotten themselves into.
Marriages don’t always last. Let’s be honest: engagements don’t always lead to marriage. A $10,000 investment in a symbol of a marriage that failed or even an engagement that never led to the altar anyway is one debilitating, depressing sunk cost. The reality of a wedding is that a marriage that begins with taking out a crippling amount of debt to finance a single day’s elaborate festivities starts a life together off under a cloud of financial strife. Anymore, it’s hardly unusual for couples and their families to invest the equivalent to a mortgage payment or even a down payment on a home or vehicle into an overly elegant wedding.
Instead, invest early on in a wedding planner committed to keeping your day within a realistic budget that allows you both to start your life together with a savings, not a bill with a due date.
y education can begin the foundation of a long, successful, financially sound career. Homes build precious equity with the right care. Even vehicles bring us to and from places we need to be. That makes them often worth accepting the debt in exchange for the future rewards.
The purchases we’ve outlined above typically offer no such extensive dividends. Think wisely about what you’re really getting for your debt.