Men's Articles

Sure Ways To Commit Financial Suicide

Stories of financial suicide - we've heard too many. Maybe the graphic images will imprint in your memory just how serious the following mistakes can be and how easily ordinary, hardworking folk like yourself fall into these traps.

Becoming A Guarantor

Think several times, before agreeing to be a guarantor for a friend who buys a new car, a nephew who is going to study or a relative who is starting up a new businesses. If a borrower is unable to pay his or her loan, the guarantor may find himself on a sure road to bankruptcy. If you have to help someone out, make sure they are dependable. At least get the borrower to buy a life insurance policy and "Will" it to you - in case he dies.

Getting Duped Into Investment Scams And Lousy Schemes Have seen friends and relatives getting into unbelievable business that promise incredible returns. Some fall prey as a result of their own desire to make a fast buck while others ignore reason and give in to a sense of "trust". If a deal sounds too good to be true, it probably is.

Whenever a deal that offers high potential returns knocks on your door, ask yourself: "Why are they coming to me and not to a financial institution with funds waiting to be invested in profitable business? Did the bank have reason to turn them down?" If you really must invest, get the opinion of someone trained in finance or someone who is a successful businessman.

Gambling

If soccer bets, majong or poker are your thing, you're issued an open invite to trouble. Statistical evidence guarantees that the odds are against you right from the start. It's an old cliché, but indulge me as I say it again - gambling does not pay.

Getting Into A Poorly Planned Business

Man entrepreneur who without a base of experience to draw upon, many have fallen foolishly into badly thought out ventures and lost significant capital. Never start a business simply because you cannot find a job or because you think have a good idea. The truth is that many good ideas do not make money and those that do often require hefty start up costs before a cent of profit is seen.

Do your homework and understand the amount of capital is required for success. Starting the business too small will impede economies of scale that are sometimes vital for withstanding competition. Not being able to meet the business's cash flow needs during a bad period (like during the SARS scare) will leave you with a pile of debt.

Make sure you have a contingency plan if you initial plan doesn't work out.Again the rule is only put into a business what you can afford to lose. If you cannot give yourself a reasonable buffer, you're probably better off keeping your day job and investing in stocks instead.

Lending Money Without Guarantee

How many times have you lent money and not received it back? A good deed is always worth doing, especially if it benefit a friend, but only lend what you can afford to do without. If you do have money, try not to flaunt it. Money needlessly flashed about is an invitation for trouble. When in a bind, even your closest friend or kin may find it necessary to take advantage of you.

If You Must Lend Money, Here Are A Few Rules To Follow

  • Observe the borrower's lifestyle and see if the person really deserves help.
  • Sign a simple Own You (OU) and work out a repayment scheme.
  • Never lend out more than you can afford. Once your "seed money" is gone, you forever reduce your capability of getting financially independent.
 

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