Key to Your Financial Wellness: Protecting Yourself Financially and Saying "No" To The Ones You Love
Updated: Jun 29, 2022
Hi There!👋 This week, we are talking about women, finance, money, and relationships and I was wondering…
🤷Are you protecting yourself financially by saying no to the ones you love? 🤷
Now, how does this make you feel? Saying no to the ones we love is especially hard for women because we’re caregivers. We naturally want to help everyone, and I’m not talking about just loaning a few bucks here and there. What I’m talking about is co-signing loans for family and friends.
And why did I bring this up?
There was a point in my life when someone said no to me. Basically, my parents couldn’t co-sign my student loans because their credit scores were so bad. My great aunt was the only person I knew with a good credit score. When I approached her, she firmly said “No” to co-signing those student loans. At that point in time, I admit I was a little hurt. I knew I wanted to go to college and was a hard worker. But now, in hindsight, I realize she didn’t know that about me, and she didn’t have a crystal ball to see what the future would bring.
My great aunt didn’t explain her decision or mention the risks of taking on my debt. And I think that if she had educated me on the reasons why, not only would I have understood where she was coming from, I would have learned to protect myself better in the future. And you know what, now that I know all the risks of co-signing, I’m proud of her.
I’m proud she stuck with her gumption and said, “I love you, Jessica. But I cannot co-sign these loans. I cannot risk myself financially.”
It’s Hard to Say “No.” But these are the facts:
👉 You are liable for the loan once you co-sign for it
👉 More Than 30% of co-signers get stuck with debt
👉 28% of the co-signers suffered a drop in their credit score due to the primary signer’s late payment or default.
👉 Co-signing a loan increases your debt-to-income ratio, making it harder to borrow for yourself if you need to.
Okay, now you’re saying, “But it’s so hard to say no to my son, nephew, or niece, they’re such good kids, and I want to help them.” Ladies, this feeling and the guilt associated are just part of being a woman. If you ever find yourself in a situation where you are asked to co-sign a loan, here are some ideas on how to steer the conversation - So you can show caring without putting yourself at financial risk.
Caring Without Putting Yourself in Financial Risk.
👉 Talk it through. Do they really need the purchase?
👉 Help them to improve and cultivate their credit score
👉 Encourage them to add additional income in the form of a side gig or part-time work
If a friend or family member approaches you to co-sign a loan, maybe the two of you can sit down and go through the steps to improve a credit score. You can say, “I don’t feel comfortable co-signing this loan. And these are the reasons why... However, I’d love to help you get your ducks in a row to get that credit score up.”
This strategy reminds me of the concept, “Give a man a fish, feed him for the day, teach him to fish, and he’ll eat for a lifetime,” You’re teaching the ones you love how to cultivate a credit score. Additionally, on a psychological basis, if that person is not interested in bettering their credit score, they’ll probably think to themselves, “Ah, this is much work,” and back off. But you know that you tried to help. You showed your love and caring by offering to give them the skills to help themselves.
Ladies, you can be caring and helpful without putting yourself at financial risk. I know this is hard to do for some women. But ladies, you need to keep yourself financially safe.
Many women get in trouble financially because they are caring and trusting. Ladies, a credit score is your passport to the financial world. Protect it fiercely.
Take the example of my great aunt, who said “No” to co-signing my student loans. At the time, I was upset. But I persevered. I got there. And now, I admire her. I look up to her as a strong woman who was smart and gave tough love so that she could be financially safe. She led by example, and now I am financially tough too.
Are you ready to talk about this?
👇Join the discussion below 👇
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Disclaimer: Jessica Perrone is not a registered investment professional nor a financial advisor. This content is for educational purposes only and is not investment, tax, or financial advice. Always do your own research. You are solely responsible for all investment, tax, and financial decisions that you make. Please read the full disclaimer here.