Articles - Archived Money Matters

Put an End to Quick Financial Fixes

During turbulent economic times, it is important to strengthen your budgeting skills and avoid quick fixes. Here are a few recommendations:

Avoid rent-to-own deals. If you are unable to afford an item, this option may seem reasonable. Keep in mind that you often pay more for the item than it is truly worth. You should also take into consideration that missing one payment may cause the item to be repossessed. Try establishing a separate account to serve as a down-payment fund. Saving roughly 20 percent of the item's value will reduce your repayment amount without increasing your debt load.

Use caution when obtaining a new line of credit. Flashy interest rates are often used to lure you into long-term debt. Carefully read the disclosure and verify whether the interest rate is fixed, or subject to change after an introductory period. Avoid using new lines of credit to meet monthly obligations, as this is a clear indication your current budget is not working.

Rethink refinancing. Sometimes refinancing produces a hidden layer of fees and an extension of the repayment terms. Utilize refinance calculators to estimate the true cost of transferring your existing balance. Focus on features such as the annual percentage rate, upfront fees and prepayment penalties. Based on the estimated cost of transferring, you can then determine if refinancing is the best option.

Prioritize debt. Without an organized budget, you may find that all of your expenses seem equally important. By categorizing your debt as "secured," "unsecured," "high interest rate," etc., you can determine the proper time frame to tackle each.

Quick fixes to financial problems can be tempting, but many are structured to leave you worse off than you started. However, equipped with the right knowledge and a little patience, you should be able to ride out any turbulent financial times.