Financial hardship or financial trouble can be caused by many issues, however, I believe that the sum of your choices determine your financial situation today.
Yes, I understand that unexpected problems occur such as losing a job or having unexpected medical expenses, but in most cases, having a solid financial plan is the difference between a financial hardship or an inconvenience.
Over the past year, I have counseled multiple clients that have made choices that caused serious financial harm, they include:
- Getting a “high interest” loan against a paid automobile to finance some home repairs, yet, barely made enough to pay bills when he didn’t have the loan. He eventually got injured on the job and went on disability.
- Purchasing a new house with $50,000 in debt, no money saved for emergencies and then the husband lost his job with a stay home wife and two children.
- Falling behind two months in rent, but current on payments for a “rent to own” 50 inch plasma TV.
- Getting a Home Equity loan to finance home improvements followed by unemployment.
- Obtaining an automobile loan after coming out of bankruptcy two years ago.
There are a few more, but these are examples that standout. These families have demonstrated common practices in today’s culture. However, common practices leave people broke.
As you can see, not having an emergency fund, going into debt, or overspending equals risk and risk can lead to financial hardship.
Question: Have you made financial decisions in your life that caused hardship? If so, did you learn from your mistakes? Please share.