The Opioids of the Personal Finance World

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Over the last couple of years, the financial services industry has been making it easier and easier to heal your financial pain through new or more accessible products and services. Let’s take a look at some of the offerings I’m referring to:

  • Experian Boost (Credit score booster)
  • Buy now, pay later services (BNPL)
  • Overdraft protection
  • Early payday services
  • Zero balance transfer credit cards (and credit cards in general)
  • 84-month car loans
  • Debt consolidation platforms

While the offerings seem great on the surface, they come with the very real possibility of killing your financial life. In this sense, the slate of financial offerings are the opioids of the personal finance world. For those who are able to use them responsibly and control their behavior, the offerings will give people the sustainable relief they need. However, for those who don’t know what they’re doing and can’t control themselves, the products and services are likely to get people hooked on the temporary relief, which may eventually cause people to sink into financial oblivion.

Beyond the relief provided by the items listed above, they also allow you to throw personal accountability to the wind. Why address the root of your money problems when you can latch onto a service that will temporarily mask it? Have bad credit because you keep forgetting to pay your credit card bills? Use Experian Boost to shortcut your way to a pre-approval on your dream home. Want to buy a $70,000 Chevy Tahoe on a $40,000 salary? The 84-month loan will make the monthly payments manageable. Did you spend $1,000 that you didn’t have on Taylor Swift tickets? Just use the Buy Now, Pay Later option.

You may already have one of these financial offerings in your back pocket and it’s causing you more harm than good. Take, for example, a person who has credit cards, credit card debt, and is living paycheck to paycheck. When there’s the inevitable overflow of expenses, they’ll whip out the credit card and pack on more debt. Credit cards are the financial opioids that are being abused. If you’re someone in this position, consider cutting up the plastic. The cards are making it too easy for you to get away with bad financial behavior, and flushing the opioids down the toilet will force you to live a more financially responsible life.

How can I use the products and services successfully?

Despite the ominous warnings, I’ll reiterate that the services can provide a significant boost. So, if you’re ready to turn around your finances, how do you use the above financial services responsibly (or any others that you come across)?

  1. First, make sure you need the help. If you can afford a $300 monthly car payment with a five-year loan, why take out an eight-year loan? On the other hand, if you have $15,000 of credit card debt across three cards, a debt consolidation loan might make sense.
  2. Second, identify and address the circumstances that caused the financial pain and develop a game plan to work through the obstacle. Why? Because after you heal the pain, you need to make sure you don’t experience the pain again.
  3. Lastly, make sure you understand the financial offering inside and out so that you know exactly what to expect and can organize your financial life in anticipation of the change.

At the end of the day, money and the associated products and services being pushed by the industry are tools. Like any tool, you need to know how to use it. If you’re interested in determining whether one or more of the financial offerings is right for you, consider contacting Moneyskope. I’ve helped several clients successfully think through the options, develop a game plan, and ensure they follow through.

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