Financial Literacy - Smart borrowing
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personal loan
7 brainless borrowing behaviors

6. Wedding loans

Taking out a loan to pay for a wedding can be a great way to start off married life. After all, nothing brings couples together like adversity.

And since everyone has already fully funded their retirement plans and paid for houses and cars, it makes financial sense to drop about $14,000 on a wedding, which according to TheWeddingReport.com is the average amount spent on the one-day festivities.

Alternatively, Patricia Hasson, president of Consumer Counseling Services of Delaware Valley, suggests scaling back the event.

"If you're starting off your marriage in debt, you're leading to potential future problems. Set back the date and save for it. I would highly caution against borrowing for it," she says.

Eric Cramer, Certified Financial Planner, an Atlanta-based financial planner with Charles Schwab, blames the out-of-control costs for weddings on the overall lack of financial education.

They don't teach financial literacy in school and it's not taught at home, he says.

"What they do teach is that little girls should have a fantasy marriage and spend $25,000 or $30,000 on a wedding when everyone could have just as much fun for one-fifth of that amount," he says.

7. Home equity loans

With the recent economic morass highlighting irresponsible mortgage borrowing and lending, it's difficult to believe that there could ever be another boom in home equity borrowing.

But even though underwriting standards have tightened up, it's almost inevitable that once home values begin climbing again, banks and homeowners will regain their taste for second mortgages.

So, run up the credit cards now so that when that time comes, you can pay off all that ugly unsecured debt with more debt that's secured by your most valuable asset.

Sure you could change your spending habits, pay down debt and then live within your means but, what fun is that?

It's not always a terrible idea to borrow from home equity. Mechel Glass, director of education for Consumer Credit Counseling Service of Greater Atlanta, says it depends what you're borrowing it for.

"If you are going to use your home equity to pay off credit card debt, then I would flag that as a warning," she says.

Greg Womack, Certified Financial Planner and president of Womack Investment Advisers in Edmond, Okla., agrees. "Typically, the reason people are in consumer debt is because they have a spending problem. So they pay it off with home equity and feel good for a while, but then keep borrowing," he says.

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