No one is perfect, and it's easy to make a money mistake every now and then. But not learning from your financial miss-steps is silly and can cost you tens of thousands over the years. for the next few days we will be postingninecostly money blunders you should avoid that we have found. Not paying off your debt So you're carrying a big balance on your credit card year after year, you still have student debt ten years after graduation, and your car loan has more mileage on it than your vehicle. What are you doing? Debt is not your friend, and paying all that interest is keeping you from financial freedom. Get the debt load off your back by paying more than the minimum balance on your credit cards and by making a special effort topay off ALL your debt. You don't know how much money you owe If you don't know exactly how much money you owe to your various creditors, you'll never be able to accurately manage your debt and pay it off.Don't run away from your bills- calculate how much you owe to the last penny and then make a plan that you can stick to in order to pay it off – even if you can only manage to pay a tiny bit off at a time. Not paying yourself first – a.k.a. not saving enough Making steady contributions to your retirement savings plan could help you build a bigger nest egg and retire sooner. It is so important to save a little bit of money from every dollar you earn. You pay your creditors the money that they want, but so often we all forget to pay the most important person : ourselves ! That’s because at the end of the month, there is nothing left after we’ve paid all our bills. Here’s a better way:pay yourself FIRST, just a bit, and then pay everyone afterwards. You will be amazed at how your savings or retirement fund will grow. Misuse of credit Loans should not be used for consuming things. Loans should only be used to buy something that you think will be an asset and that will be worth the same or more in the future. That’s the way to get ahead. If a loan is used to buy things that we use , then we will fall further and further behind, because, at the end of the day, we will still have a loan, but we will have nothing to show for it. So, taking out a loan or a line of credit to buy something that should go up in value, like a house or a business is a reasonable action. But to take out a loan or carry a credit card balance to buy things that we use or that go down in value, like food, or restaurant meals, or a TV, is not a good thing and should be avoided. Thinking of today and not tomorrow We all want to feel good. And sometimes we make the mistake of thinking that buying stuff or going on holiday will make us feel good. We will certainly feel good for a short time when we spend money on those types of activities. But, if we use credit to do those kinds of things, or if we spend all our money ”today” and don’t save money for our future, then we will not feel good or be happy in the long term. We will feel good and be happy for a week or two on holiday or for a day or two after we buy something, but the rest of the year we will feel stressed and unhappy – it may not be worth it. We need to balance our spending and our saving. Motor toys - the biggest cash drain A big mistake is to spend too much money on the latest model car. In fact, a big mistake is to spend too much money on any of the latest toys, whether they are cars, cell phones, TV’s or any other gadget. Try to make your “things” last longer, don’t buy the latest model, and then put the money you would have spent on the latest toy into your retirement account. You don’t have a firm budget One of the main reasons why people can't get out of debt, or are in debt to begin with, is because they don't stick to a budget.Budgeting is the only way to truly manage how much money flows in and outand see where you can make some cuts to your spending. If you budget correctly and realistically, and you have the will power to stick to it, you will always find a way to control your living expenses and save for your future. Misusing your credit cards If you only pay the minimum on all your credit cards, you'll never pay them in full and you'll end up paying way more interest than what you had initially spent. Credit cards should be used only for the convenience of not having to carry cash. Credit cards should not be used as an easy form of borrowing– they are too expensive (their rates are too high) and you should not borrow money for your daily living expenses. I know this may sound counter intuitive, but it's always better to pay off the credit card with the smallest balance first and then work your way up to pay off your larger balances. If you first repay the smallest credit card balance in full, that's one less minimum balance to worry about. Living beyond your means Too many people spend more than they are bringing in. People like to spend money on new things, on eating out, on making sure that they are looking good ! That’s ok, if you can afford it, which means that as long as you are saving some money and spending less than you are earning, then go ahead and spend, spend, spend. But, if you struggle to make ends meet every month, or you see your credit card balance go up every month, then you know that you are spending more than you are making, and you are heading for a pile of stress and unhappiness. Do whatever you can to stop doing that! It may be uncomfortable for you at the start because you feel that your standard of living is going down. BUT,you will be much happier at the end, because your standard of living will actually go up, as you stop paying too much interest, as you save more, and as you have more money for investment and retirement.
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