Financial Black Holes You Need To Avoid

When it comes to trying to manage your finances, you’re probably pretty savvy. You try to stick to a budget, you’re careful about ensuring you never miss a debt repayment, and you even have a side hustle so you can keep the family finances looking as healthy as possible.

Yet despite your diligence, and your dedication to trying to make your budget work, you keep finding that your budget is stretched thinner than you feel it should be. Every month, there are expenses that just never seem to reduce, even though you’re doing everything right.

If you have gone through the situation above, then you may be facing the most dreaded of scenarios: a financial black hole.

What is a financial black hole?

Firstly, let’s be clear; we’re talking about metaphorical financial black holes. You’re not suddenly going to see your finances vanish, never to return. However, the comparison to real black holes is rather apt for these expenses.

Financial black holes are expenses that are never going to be worth the hassle. You keep paying money towards them, but you never see that money again— it vanishes into the abyss. Even worse, a financial black hole is never satisfied; and it will continue to pull more and more of your finances into its gravitational web.

What are some examples of financial black holes?

The classic example of a financial black hole is an old car. You don’t think you can afford to replace the car, so you try and keep on with running repairs; a fix here, a new engine piece there. Despite this, you’re still constantly having to find the money for another fix, another part, another essential, just to keep the car on the road.

Making do with the car you have might seem like a good idea, but over the course of the year, those little expenses will add up— and the problems with the vehicle just keep on coming. You’d have been far better off saving up for a few months, buying a new-to-you used car, searching used car warranty providers to ensure coverage against any future breakdowns, and moving on from your former, financial black hole of a vehicle.

Is it just cars that can be financial black holes?

No, there are dozens of examples of how this can happen. Essentially, anything that you continually have to repair could be considered a financial black hole.

But repairing is good, isn’t it?

Of course! Repairing and making do with items is a fantastic choice, especially as doing so helps to keep items out of landfill. A financial black hole isn’t just something that needs repairing; it’s something that needs repairing multiple times.

Most financial black holes are for items that have multiple points of failure— for example, cars, which have hundreds of moving parts that can need fixing. Kitchen appliances can also be financial black holes, as can computers, cellphones, and other expensive gadgets.

The reason that people try to repair these items is that they fear the cost of replacement. And sometimes, that’s fine, and repair is justified and more than sensible. However, the event horizon is crossed if an appliance or gadget has had to be repaired or altered three or more times in the last 12 months, and the repairs have been for at least two different problems.

What if I can only afford to repair an item?

Repairs are often cheaper than outright replacements, especially for big-ticket items like cars and kitchen appliances. If you have a kitchen appliance that has decided it just was done working, check out https://www.woodstockappliancefix.com/ to see if the cost to repair is cheaper than the cost to replace. Often times we go to replace because we would rather not deal with waiting for the repair, however, look at it like this:

You’re put off by the cost of paying $500 for a new washer/dryer, so you choose repair.
The repair costs $150.
This seems like a great saving; you’re $350 better off for choosing a repair rather than buying new.
However, if the washer/dryer breaks down again, that’s another $150.
If it breaks down for a third time — which, you’ll remember, was defined above as the point at which a financial black hole is threatening — that’s another $150.
You’ve now spent $450 repairing a machine that, history suggests, is just going to break again.
That’s only a $50 saving on a brand new machine that would have had an entirely new warranty, this guaranteeing you repairs and replacements for at least 12 months.

The above just doesn’t make financial sense. So, as general rule, you should repair once without fail; repair twice with more reservation; and elect not to repair the third time you experience an issue.