Bloodcurdling Personal Finance Horror Stories

In the spirit of Halloween, Yahoo Finance lists several frightful financial stories and warns readers: “Don’t let these horror stories happen to you.” The list contains the following nightmarish money moves:

1. Having your new car wrecked only to discover your insurance carrier only covers the (lower-than-cost) Blue Book value
2. Using your retirement savings to fund a risky new business venture
3. Keeping more than $100,000 in a savings account at one bank
4. Being overconfident in your finances (when you least expect trouble, it’s likely just around the corner)
5. Financial denial over a soon-to-adjust home mortgage

Put these on a list with carrying an on-going credit card balance, skipping the employer match on a 401(k), and putting all your investments into company stock and you have a fine set of financial horrors that would even make Dracula scream!

Next Stop — the Financial Twilight Zone [Yahoo Finance]

(Photo: kilgore)


Edit Your Comment

  1. warf0x0r says:

    1. Is easily avoidable. You can get GAP coverage through most car insurance companies for an extra fee each 6 months or through the dealer.

  2. darkened says:

    Gap insurance should be treated as mandatory on all new cars, most car lenders will even require it for financing anyway and if you don’t get it through private insurance you’ll end up paying like 20x more than it’s worth added to your loan and have that acrue interest also.

  3. AndyDuncan says:

    BloodCurling: where instead of sliding rocks down a frozen rink, you use landmines. Don’t throw too hard!

  4. peat1 says:

    the company that has $900,000 in limbo might have avoided that through use of CDARS. They allow you to have deposits up to $50 million deposited across mulitiple institutions giving you full FDIC coverage. They might only be for personal accounts though. I haven’t needed one….YET!

    Check them out if you are lucky enough to need one.

  5. csdiego says:

    That’s weird, I always thought the Blue Book value was higher than the real market value, and that’s why DMVs use it to calculate excise taxes on cars.

  6. madanthony says:

    “lower than cost blue book value” is a poor way of phrasing it. What they should say is “you are upside down in the loan and owe more than the car is worth, and insurance only covers the value of the car”.

    part of the reason this happens is because cars depriciate a bunch the first year, so if you’ve only had the car a few months and only made a couple payments, then you owe more than the value. But what makes it even worse is people who don’t put any money down when they buy, or even worse – who trade in a car that they are already upside-down on (owe more than it’s worth) and roll what they owe on that into the loan for the new car, so they owe way more than the car is worth.

  7. 12monkeys says:

    @darkened:Not true,it is illegal to require GAP insurance and it is not 20x more.The GAP that your insurance company offers usually does not cover your insurance deductible.Most of the coverages that a dealer provides will pay the negative equity as well as the insurance deductible.Some will pay 2-3 monthly payments and issue a rental car as well.

  8. BigNutty says:

    Ever wonder why so many people make bad financial decisions? We don’t teach any of this stuff in our schools. Why? I don’t know, but teaching how to manage your finances should be a mandatory class.

    Where else would be a better place to learn about this subject? In bankruptcy court?

  9. weg1978 says:

    Let’s not worry too much about bank failures…have a look at this graph from the FDIC webpage:

    Considering that there are about 7,350 separate institutions where you can deposit your money, and that in the last 3 years, 3 banks have failed nationwide (all of which were acquired by another bank), the odds of you losing your money is incredibly small (and really more like zero, since another bank will most likely ‘buy’ your account).

  10. Wowbagger the Infinitely Prolonged says:

    I didn’t even know about gap insurance until I applied for my first car loan. I got the loan through my credit union and since I could include the insurance in the loan I decided to go for it. When my car was totaled 13 days later I was very glad I made that decision. Needless to say, I got gap insurance when I went in for my second car loan.

  11. jrdnjstn78 says:

    I never knew about GAP insurance and I’ve bought 8 cars in the 18 yrs that I have been driving. I found out about GAP from my cousin. She had an accident and told me about her GAP insurance.

    Fast forward about 3 months later she wrecked my truck, with me and my 2 kids inside, that I had just bought. Of course I didn’t have GAP on it, so I was worried that my insurance was not going to cover all of it. Well it did and I had 600$ to spare. Anyways check your insurance and make sure that you have all the insurance you need. I didn’t have PIP on my insurance either so I had to use my medical insurance to cover me and my kids injuries form the accident my cousin caused. What a mess that was.

    I did get GAP insurance with my new car and I got it from the dealership. It cost me 200$, so yeah, I added it.

  12. Elvisisdead says:

    @BigNutty: Agreed that a basic personal finance class should be added to High School. I didn’t take one until college, but it did me a huge favor in getting me pointed in the right direction. Didn’t get into much CC debt in college because I was more scared of my Dad finding out then having to repay it. Also taught me to live within means.