"Eight ways to get poor" first appeared on iafrica.com on 17 March 2010. It is the 7th most read "Financial fitness" article of the past year. Liked it? Get your finances in shape in 2011 - bookmark http://personalfinance.iafrica.com/.

Back in the day when horse power was equated to real horses, and you dressed up to visit the bank manager, applying for finance was serious business.

As a rule a bank would only extend credit for the purchase of an asset like a house or farming equipment. Today, credit vetting has become as easy as pressing a few buttons on a computer, which means that assessing potential credit customers is relatively easy.

This is a double-edged sword though, because on the one hand the bank can assess someone?s credit-worthiness in under 30 minutes, but it also means that they are willing to lend good customers money for lifestyle purchases. No matter how easy it is to get credit, there are some things that should never be financed.

It is no secret that financing too many items that have little or no value can send you to the poor house. It?s called the "play now, pay later" syndrome. People who spend too much money on acquiring luxury items on credit are in essence robbing their retirement funds.

Here are a few things you should never borrow money for:

 

1. Weddings

     I don?t want to be a spoilsport here, but can you really justify a R50 000 bill when you don?t even have the deposit for a house yet? A smaller wedding will save you a fortune and when you look at the photos, 10 years down the road, at least you should be able to remember all the guests? names.

    

2. Holidays

     To spend R40 000 on an overseas trip is an extravagance even for a well-heeled family. To finance a holiday of this nature with credit is sheer lunacy. Vacations have no intrinsic value. The pain of paying off the credit cards will linger long after your muscles have recovered from the downhill skiing. Of course you deserve a holiday, but with some lateral thinking you can have a magnificent time for a fraction of the cost.

    

3. Clothing

     The reason clothing stores charge so much interest is because they know that if you default on the loan, the clothes cannot be reclaimed and resold. Second-hand clothes do not appreciate in value unless Elvis wore them.

    

4. Groceries

     I am always amazed to see people using their credit cards in the local convenience cafe for bread and milk. They may often be paying interest on those cookies long after they have been digested. If you find yourself habitually financing your groceries, you need to have a long hard look at your spending.

    

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