Wednesday, January 5, 2011

Money Matters to Avoid

Greedy hand

There are issues involving money that you should avoid like the plague. Do not be sympathetic, greedy or just to show off and regret later. 

  • Be a guarantor: When a financial institution asks for a guarantor, it usually means the principal borrower does not meet the institution’s lending requirements. You, as a guarantor, bear the risk of paying for the loan instead of the borrower. In another scenario, if it is a car loan, the borrower and the car are missing. You end up paying the loan for nothing.

  • Provide a personal loan: It usually means the person asking for the loan has no emergency fund or he or she has exhausted all sources of fund. As a last resort the person seeks your financial assistance. If you are agreeable, the loan is more likely to be defaulted.

  • Invited to join a business venture: Nobody is going to ask you to join a profitable business; he will beg, borrow or steal to do it alone and reap the gain in full. It is usually risky when you are invited to participate in a joint-venture concern.

  • Quick return schemes: Huge return in a short time is usually too good to be true. Do not be gullible to believe in such schemes and part with your hard earned money.

  • Take over a business: You have seen such advertisements in newspaper that people are selling their existing businesses. It is usually stated in the advertisement that it is situated in a strategic location with existing clientele and the owner has no time to look after the business. If the business is making money do you think the owner wants to sell it for good?  He or she will, by hood or by crook, will continue to run the business and make more money.

  • Invest for the short term: Just as a business takes time to grow your investment will not bear fruit in the short term. Choose an investment with long-term prospect, which allows to grow.

  • Splash out on a wedding: Just because other people have spent lavishly on their wedding and you must do the same.  Your personal finance dictates how much you can spend and it should be within your means. Don’t start a family and be debt-ridden.

Have you caught in such situations? What are the other money matters to avoid? Please share with us.   

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