3 Things That Will Get You into Financial Trouble
Posted on January 25, 2007 in the category
Being in debt is a terrible experience and a situation that you want to take steps to correct as soon as possible. Not everybody knows where to start and it takes most people a while to come to the realization they are in trouble and could use some help. Here are some simple suggestions that will keep your financial situation from getting worse, while you come up with a plan to get out of debt.
Bouncing checks is bad news. If the money isn’t there, then you shouldn’t write the check. If you are trying to beat the check to the bank with a deposit, you are asking for trouble. There is no guarantee that you will beat the check. Bouncing checks gets expensive. The bank charges a fee that is usually over $30. The merchant may resubmit the check again. If it bounces a second time there will be another fee and at that point the merchant will probably be charging you a fee or prosecuting you for the check. These are very unnecessary and avoidable.
Postdating checks are also a problem. A postdated check is a check that is presented to a payee with a date on it that is in the future. The problem with this is that the merchant does not have to wait until that date to be able to present the check to the bank. Once the bank has the check in their hands, they can and may process it and if the funds are not there, the check will be returned for insufficient funds and you will be charged a “returned check fee”.
Some collection agencies will try to get you to give them posted checks. Although they do not usually cash the check early, accidents do happen and they may do just that. The best policy is to wait until the money is in the bank before writing the check. That way you will be assured there is no accident.
Taking out “payday” or “cash advance” loans are big trouble. These types of loans require you to have, at the minimum, a checking account. Some of these lenders also require bank statements, proof of a home phone and/or paycheck stubs. These loans are secured by writing a check that is held by the payday lender for an agreed upon period of time (usually 2-4 week). On the agreed upon day, your check is either deposited or you have to buy your check back with cash.
The drawback to taking out a cash advance loan is the fees involved. These fees are usually $10-$15 per $100 that is borrowed. You are also required to sign a contract that explains what will happen if your check is returned for insufficient funds. If you look at this contract closely, you will be paying interest rates of over 1000%, annually. You could get a better deal than that from a loan shark.
If you can avoid the three things listed above, you financial situation will not get worse. These three things are nothing but trouble. While you are taking the time make some more permanent decisions about your finances, avoid temporary fixes that could lead to trouble.
debt tips, debt reduction, credit card debt, debt problems
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