119. Re-Thinking Finances - Part 2 (Total Money Makeover)

Time to continue re-evaluating some things based on what I’ve learned from “The Total Money Makeover” by Dave Ramsey. Be sure to check out part 1 too. 

Here’s part 2 of what I call “Rethinking Finances”:

D. Cosigning Loans

It is said that you are helping by cosigning a loan for a friend or family member. While it may be helpful for people trying to establish credit, be ready to repay that loan. The credit union, bank, or lending financial institution wants a cosigner for a reason. That reason being that statistically speaking the lender doesn’t expect the friend or family member to pay. If the friend or family member doesn’t pay on their loan it will seriously negatively affect the cosigner’s credit as well. And if the friend or family member doesn’t pay the bank will come after the cosigner! (TMM, Ch. 3)

“We continue to believe the myth that a loan to a loved one is a blessing.” – Dave Ramsey

“This sums up cosigning; broken hearts and broken wallets.” – Dave Ramsey

Here’s’ some passages in the Bible that speak to this issue of lending money to family.

One who has no sense shakes hands in pledge and puts up security for a neighbor.
Prov. 17:18

The rich rules over the poor, and the borrower becomes the lender’s slave.
Prov. 22:7

Do not be a man who strikes hands in pledge or puts up security for debts; if you lack the means to pay your very bed will be snatched from under you.
Prov. 22:26-7

E. Cash Advance, Rent-to-Own, & Payday loans

Cash advance, lay away, payday loans, rent-to-own, title companies, and pawn stores help lower-income people get ahead. Absolutely false! These businesses are designed to take advantage of lower-income people in "helping" them buy or spend what they can't afford. The only people who make money are the salesmen, managers, repo men, and owners. (TMM, Ch. 3)

“It is human nature to want it and want it now; it is also a sign of immaturity.” – Dave Ramsey

Towards the end of my nearly decade-long career in the retail industry, the company I worked for began a partnership with a rent-to-own company. With our company customers could expect to pay 21 to 29% interest. If the customer didn’t qualify for our store credit they were directed towards this rent-to-own “alternative” where they could pay 3-4 times the value of the product. A $500 Plasma TV through our company would’ve cost anywhere from $750 to $1000. But a $500 Plasma TV might end up costing the customer $2000 or more with the rent-to-own company. 

“These types of businesses are legalized loan-sharking.” – Dave Ramsey

“We buy things we don’t need with money we don’t have in order to impress people we don’t like.” – Dave Ramsey



How have you been rethinking finances recently? Have you read "The Total Money Makeover"? 

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