“Love” credit purchases frequently end up in bankruptcy. When love comes into the equation, emotions drive financial decisions instead of the facts. Below are three common “love” credit situations that commonly caused bankruptcy.
Big gifts can easily lead to a big bankruptcy. Still, all the time, expensive gifts are purchased on credit just to show how much a person is loved. Whether it’s a convertible or a motorcycle, the gift has to be usually pretty extreme to make the statement, “I love you THIS much.”
Buying a big gift to show your love is an especially bad idea. It is even a worse idea if you purchase the item on credit. If you are planning a large gesture like this to prove your love, remember that you may also be signing up for a future bankruptcy when you fill out the loan papers.
I have personally encountered scores of people who have cosigned out of love for their romantic partner, family member, or a close friend. Such an emotionally-based decision to cosign for someone else’s loan purchase frequently leads to bankruptcy. When your beloved loan partner defaults, you will be in deep trouble if you cannot personally afford to make every single payment associated with the loan agreement. If you are unwilling or unable to “gift” the same item right-out, then you have no business consigning regardless of the situation.
Nothing shows love in many peoples eyes more than a large credit jewelry purchase. Sometimes even large-stone engagement rings are purchased on credit. Although the gesture comes from the heart, the financials behind the purchase are completely out of order.
Jewelry has very little useful application in the real world. The purchased item is only a gesture of how much you love the person – on credit. Sometimes even the jewelry items will go back to the creditor when payments are in default. Even engagement rings have been known to go back to the creditor in default. The actual value of the jewelry is usually much less than the loan value. Bankruptcy can easily follow if either the loan payments or the engagement begins to fall apart.
Gifts of the heart should be purchased in cash or not at all. Remember, it is the heart that counts. Love can usually be expressed in much better ways than monetary means. Keep it simple: avoid love gifts so that you can avoid bankruptcy.