If you want to know whats wrong with peoples personal finances, just observe those who are willing to borrow money in order to borrow more money!  One example is using a credit card you cant pay off in full each month, for a downpayment on a car.  Since the limit for credit card use for buying at the car dealership is usually $3,000, and given most downpayments on vehicles range from $0 to $3,000 to buy or lease, using the credit card is a tantalizing proposition.

Forget the fact that these car buyers dont make 10X the value of the car in annual salary.  They cant even pay cash for the car or come up with even 10% of the value of the car as a downpayment!  Look, I know more than anyone how alluring it is to buy a nice car.  I used to be a car addict with 7 different cars in as many years.  Its just irresponsibile of consumers to use their credit card for a downpayment when they dont have a healthy savings account balance to match the entire value of the car before purchase.

BANK OF MOM AND DAD FOR REAL ESTATE

The other common example is college grads borrowing a housing downpayment from their parents.  I can live with this, if you are paying your parents back with interest.  What frustrated homebuyers fail to realize when buying in international cities such as San Francisco, Paris, Hong Kong, London, and New York is that they arent up against just the buyer, they are often up against the buyers bank account PLUS the bank account of mommy and daddy!

I see it time and time again at open houses where a 26 year old is checking out a house with his parents.  Hes asking mommy where he should place the dining table, and daddy whether the big screen TV hes going to get for Christmas will be able to comfortably fit in a particular nook.  These grown kids are looking at properties valued between $600,000-$1,000,000 here in San Francisco.  Not bad if you have parents willing to spend!

People wonder why housing prices havent gone down much at all in SF and NYC, and its because of the generational bank accounts that keep kids afloat.

The question is, do you ever pay your parents back?  I mean, if youre 30 years old and still living off the parents, doesnt that do something to ones pride and self-esteem?

BORROW TO BORROW FOR EXPERIENCES?

Borrowing money you dont have to be able to borrow money on a depreciating asset like a car is one of the dumbest things you can do for your personal finances.  Most things depreciate, which begs the question, What about borrowing money for an experience you cant afford?

The cruise for two we took last year cost about $10,000 total, including air fare.  We had to put a $2,000 deposit to secure our suite for 12 nights.  This is where the temptation to borrow the $2,000 arises and infiltrates your personal finances like Team 6 getting Osama.  I plopped down my credit card of course, because I wasnt about to mail a check.  I can see the temptation of just paying the minimum, but even with my good credit, my credit card interest rate is 10%!

Thirty days later, I paid off the balance and a month before we set sail, I paid off the remaining balance.  If I could not pay for the $2,000 deposit after 30 days interest free, I would not have gone on the cruise.  I do believe good experiences appreciate over time.  However, if you are to borrow money, you better hope that your good memories appreciate faster than the size of your debt balance!

JUST SAY NO TO BORROWING WHAT YOU DONT HAVE

It doesnt matter whether you are buying things or experiences on debt.  If you cant afford to pay for the downpayment yourself, you certainly should not be borrowing money to borrow more money.  You cannot afford it, just like I cant afford to fly business class and drive a Lamborghini.

Tell yourself you are poor.  Tell yourself you are unhealthy.  Tell yourself you are undeserving because you did poorly in school, ate too much, and dont work hard enough.  Whatever the case may be, tell yourself that you dont deserve these things or experiences simply because it is the truth.  Your personal finances will thank you down the road.

REWARDS CREDIT CARD RECOMMENDATIONS

Barclaycard World Master Card:  If you are an avid traveler and looking for a travel rewards credit card, you can sign up for the Barclaycard Arrival World MasterCard with no annual fee  with double the points on travel and dining and 20,000 signup miles ($200 value). Barclaycard offers $200,000 in automatic travel accident insurance, reimbursement for expenses if your bag is lost or delayed, trip cancellation coverage, and $0 fraud liability.