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Financial difficulties span all across the board from small difficulties to major ones that can ruin your life. There is a correlation between certain actions that someone takes and the amount of debt they are in. It is all too often a common thing to see older people living on social security with extra money to spare but successful people who make a good amount of money with nothing to spare. Once financial difficulties start, it can be easy to keep them progressing and much harder to slow them down. It feels like everything is piling on you and you cannot get out of the situation you are in. There are 5 different traps that can suck you in financially.
Leasing
Leasing a vehicle is a major trap that people find themselves stuck in. The problem with leasing a vehicle is that you never own any portion of the car. You place a down payment down on the vehicle and make monthly payments to it, however, when the lease runs up you must turn the vehicle in and then you can lease another one. You are basically throwing money away in this situation. It is better to purchase your vehicle and even make payments if you have to. At least this way you are paying towards something you will own eventually.
Credit and Loans
Another major financial trap that catches people is credit cards and loans. Credit cards are a dangerous habit to form if you do not actually have the money. A credit card allows you to make a purchase for something without having to pay for it at that moment with the intention that you will then pay off your balance or at least towards it. Some people become stuck and then never pay off their credit cards or become attached to them and have to continue using them. High interest rates and monthly payments will surely get you stuck.
Payday loans are good for the once or twice use but if you continue to use them you will become financially strapped. People rely on these to help them pay for something that they do not have the upfront money for. Payday loans are very easy to obtain but they carry a hefty interest rate with them. Normally you only have a week or two to pay them back.
Emergencies
Not saving any money for emergencies will get you into some trouble. It always seems like when you do not have any money set aside, something that can go wrong, will. You are left to then find a source of funding.
Retirement
Many times people do not think about saving money for retirement. It is important to do so to be able to maintain your lifestyle later in life. If you start saving at a young age, the money will add up.
Lifestyle
People run into trouble when they live a lifestyle and do not have the proper funds to live that lifestyle. It is common to see people spending more money than what they make. This type of lifestyle will get you into a financial trap.
Financial traps are easy to get into and harder to get out of. It is common to see people stuck in stressful, financial situations. Learning and recognizing the habits that put you in a financial dilemma is the start to freeing yourself from the debt that holds you down.