Talk about the gift that keeps on giving the whole year through!
I am up visiting family in Utah for the Thanksgiving holiday and noticed this sign on a local credit union. It got me to thinking about trends I notice when I review the debts of my bankruptcy clients.
Rarely have my bankruptcy clients experienced a major financial disaster that has lead them to bankruptcy. Sure there are failed businesses, major illness, and other big problems that lead to them incurring a large amount of debt over a short period of time.
But most often when I see a large amount of credit card debt it was accumulated over a long period of time.
And loans like the one offered on the sign in this picture are part of the problem. I see a sign like this and I totally get it. I am a father to six children and fully understand the pressures of the holidays. I remember when I was a kid I heard my dad say that he hated Christmas because there was such pressure on him as a father to provide – and when money was tight it made things very stressful.
That being said, it is often the accumulation of smaller amounts of debt over the years that can lead to bankruptcy. If you supplement your income with credit cards by $5,000 per year then in five short years you could have as much as $25,000 in high interest consumer debt.
Too often we see a loan that offers $1200 payable over 12 months and we think - “hey, that is only $100 a month, I can afford that”. Then six months later we realize that we have only made one payment, the interest is accumulating, and that $1200 loan is maturing into a $2,000 loan that is spiraling out of control.
I love the holidays. Family, friends, a little time off. But I fully understand that there are pressures that come with the holidays that tempt all of us – myself included – to make bad financial decisions.
Hopefully we can enjoy our families, be grateful for the blessings in our lives, and avoid the pitfalls that can cause financial trouble months (and even years) down the road.