By Catherine Martinez
We’ve all been there, made a decision with our money that seemed good at the moment but didn’t benefit our pocketbooks in the long run. But here’s the good news—we can avoid plenty of money traps if we plan and see them coming. In 2025, don’t get caught in these traps:
Credit Card Debt
This is one of the easiest money traps to fall into, but it can lead to a deep financial hole that is hard to escape. Give your credit cards a vacation and pay off debt in 2025—your wallet will thank you in 2026.
Payday Loans
Lenders are willing to offer a paycheck before payday, but it comes with a high interest rate that makes credit card debt blush. Repayment is often due by the next payday, and this short turnaround doesn’t leave much room for error. If the borrower is unable to pay off the full amount, there are additional fees, and interest adds up quickly. A payday loan can incur up to 400% APR each year if it is not paid off. Avoid payday loans at all costs.
Car Title Loans
Car title loans are easy to secure even with bad credit and will often offer up to 50% of your car’s total value. But even though this can be a quick fix to cash flow issues, if loans are not paid off quickly, they can add up to 300% in interest over a year (APR)! Don’t risk it.
Online Gambling
No form of gambling is good for personal finances—but online gambling and its legalization and deregulation have led to a sharp increase in users. In 2023 alone, Americans bet $119 billion betting on sports online, and 2024’s final totals promise to be bigger. But don’t be fooled by easily accessible apps that make you believe they will make you money while watching your favorite team—they are designed for participants to fail. Gambling can quickly develop into an addiction and cost you everything. If gambling is already causing you to lose money and sleep, reach out to get help now.
Not Budgeting
Sometimes, the biggest traps are what we fail to do, and budgeting falls into this category. It doesn’t have to be hard; you can do it from your phone! Check out a few apps to help reign in your spending and increase your savings account.
Not Recognizing Your Money Weakness
Each of us has a money weakness, and identifying and addressing these weaknesses can save us a lot of pain. Are you an overspender? Create a budget to help rein in your spending. Are you someone who pinches every penny to the annoyance of your family members? Then, plan how you will become more generous while saving and making great financial decisions.
Not Saving
One of the ways you can avoid high-interest loans is by having a healthy savings habit and building an emergency savings account. Even with high inflation, saving money is still possible—even a small amount can make an impact!
Making Large Purchases Before You Are Ready
Sometimes, traps come from us wanting good things—like investing money in a mortgage instead of giving it to a landlord. But taking out a mortgage before you’re ready can lead to more problems. Make sure you can make a healthy down payment and that the monthly payment is suitable for your income level before you start making offers.
Ignoring Retirement
When inflation is high and the cost of living increases, retirement savings become a lower priority. However, regularly putting even a small amount of money into a retirement account will pay big dividends one day.
Get Rich Quick Promises
Here’s a good rule of thumb—if someone promises big money without much work, you either are going on a game show or they are selling you a “get rich quick” promise. These can include pyramid schemes, bad investments, or even becoming the victim of fraud—like a Ponzi scheme. Most often, anything with great rewards will not come quickly but will result from hard work, dedication, and relying on wise advice.
Here’s to smarter money moves in 2025!
ABOUT THE AUTHOR
Catherine is a full-time copywriter for a nonprofit organization and a freelance writer. She spends her days writing, chasing toddlers and learning how to master her money. Catherine lives in Houston, Texas, with her husband and their two young children.
