Could your company have a negative impact on your financial health?
Credit is important, but you already know that. As a person who is alive in 2018, you are probably aware of the need to have a good credit score. After all, having a bad credit can make it very difficult to obtain a credit card, a loan or even an apartment.
For this reason, most people have a general sense of what to do to keep their credit in the black— They can make sure to pay their credit cards every month, make sure they stay up to date on all their bills and stick to a budget to not spend beyond their means.
It sounds pretty straightforward, but it can be a lot harder in practice. What if something else prevents you from repairing your bad credit? What if the people you surround yourself with are part of the problem? As this deadly flu we’ve been dealing with all winter, could a bad credit be contagious?
If your friends spend their money as if there was no tomorrow, pressing you to go to expensive dinners, taking a lavish vacation and buying the latest branded clothes, you may be more willing to sacrifice the health of your Credit Joneses.
We’re sure your friends are awesome, but are they really worth getting stuck by visiting summary showcases for a no credit check loan or shopping for payday loans online? Yes, we didn’t think so.
Social effects are real, but they are not the main cause of bad credit.
We talked to Certified Money Coach Amber Berry To see if your friends and family’s bad financial habits can rub off on you.
“If your social circle tends to have irresponsible spending habits, makes financial decisions poorly informed, and you lean on each other to get financial advice, this can quickly become a case of blindness.”
“However, there are many Americans who have bad credit due to situations beyond their control, such as medical debt and the complications of unemployment. This kind of situation does not necessarily indicate irresponsibility. ”
Berry has a point. We recently wrote about the myth that medical debt goes away after seven years (Spoiler alert: this is not the case!), and in our search for this piece, we stumbled upon a surprising statistic: medical debt is the first reason why Americans declare bankruptcy.
We repeat: Medical debt is the leading cause of bankruptcy in the United States.
According to a 2013 report from CNBC: “According to the new data, bankruptcies resulting from unpaid medical bills will affect nearly 2 million people this year, making health care the first cause of these deposits and exceeding the bankruptcies due to credit card bills or to unpaid mortgages. And even having health insurance does not protect consumers from financial hardship. ”
It’s true. The first reason why American residents declare bankruptcy is not the result of poor financial planning. It is not because they have maximized their credit cards, bought cars they could not afford, or were caught in a cycle of predatory debt bad credit loans. That’s because they got sick or had a car accident. It was because their son had a serious illness or that there had been another catastrophe. Many people with bad credit have done nothing to deserve that score moored.
Feel obligated to spend too much? Then set healthy boundaries.
However, while there are a lot of people with bad credit that is out of their control, others have a choice. If your friends and family are irresponsible spenders who are pressuring you to do the same, Berry thinks you’d better separate yourself from your money and separate yourself from situations where you could be under financial pressure Reckless.
“If your friends and family cannot respect or support your financial goals, it may be wise and beneficial to limit your interactions with them in certain circumstances if you consider that maintaining personal boundaries is a Challenge, “she said.
Examples of situations to avoid might be to eat with some people if you know they tend to expect you to pay, or politely refuse invitations to events that don’t fit your budget. It’s good to love people from afar! ”
A spouse’s excessive expenses are even more difficult to avoid.
But what happens if the person closest to you in the world-your spouse-is the one who is in the credit dumps? And if you can’t get away from that person because you live with it and are in the process of raising a group of tiny humans with it?
We’ve already written about how your husband or wife’s credit score can affect yours, And while there is no joint credit score or “married” (meaning you don’t merge scores when you do the knot), your spouse’s financial habits can certainly have an effect on your credit score.
For example, if you have a joint credit card, a joint bank account, or a mortgage, if your spouse drops the ball, you might be the one who stays in trouble. Your spouse’s tendency to rely on high interest cash advances Reflect badly on your too.
Take the initiative to practice healthy financial habits.
So how can you encourage your husband, your mother or your best friend to take over?
“Preach by example “, said Berry. “In the case of how you manage your finances, be open to your goals and exercise discipline when temptation arises allows others to witness your journey and be inspired along the way.”
For example, Berry said that if your goal is to repay the debt, you should give yourself an allowance between salaries.
“Let’s say a friend invites you to the amusement park this weekend but you don’t have enough money to do it. Ask your friend if he would be willing to support you by going another weekend after your next paycheck so you can afford to have a good time and stick to your goals. You may find that they are in a similar situation and you can support each other. “