5 Financial Mistakes to Avoid
According to American Debt Advisor 80% of Americans are in debt, including secured debts like homes and cars. When you exclude those secured debts, still 50% of Americans are in debt “and half of that 50% has thousands of dollars owed”. Those numbers seem very discouraging, so how do we avoid living in the hole? Below are five financial mistakes to avoid, and how to make sure you always stay on the right side of your finances.
Spending beyond your means
A typical habit for many Americans is spending on impulse and emotion, which can be very dangerous and lead to trouble. Another reason Americans spend is to “keep up with the Joneses” or I guess these days it’s the Kardashians. We tie our worth to fancy cars, big houses and designer clothes, so we overspend, consume heavily and fail to save. Dave Ramsey advises to “Stop keeping up with the Joneses. They’re broke.” They may even be bankrupt.
So, stop spending beyond your means. Evaluate your lifestyle, make necessary cuts and downgrades and start developing a financial plan. Begin immediately by creating a monthly budget and selecting a financially responsible friend or family member to help keep you accountable.
Not making saving a priority
One of the biggest mistakes Americans make is not making saving a priority. The excuse is usually, “I can’t afford to put money away.” Well that’s because you’re busy spending beyond your means. But can you actually afford NOT to save? What will you do in the event of an emergency with no cushion to fall back on?
Start saving immediately! Start small by cutting unnecessary costs, and work up to budgeting about 10% of each paycheck to go into a savings account. A smart option is to invest in something that appreciates in value like a CD or Life Insurance Policy. One of Miss USA’s savings tips includes opening up a Roth IRA.
Paying the minimum
Be sure to pay off your debt as soon as possible, if not most of what you pay will go directly to interest. This is actually another one of Miss USA’s tips. She says that paying the minimum due is like “pouring water in a bucket with a hole in the bottom – you’re never going to pay it off.” Always pay more than you have to and as much as you can.
Overpaying/ paying retail
Many Americans overpay for services like their cell phones, mortgages, electricity, cable and others because providers raise prices and consumers continue to pay without question to avoid the hassle. In the same breath, paying full price on your purchases can also be a financial drain. Although it’s easier to just pay without question or coupon, those extra costs can really add up.
Billcutterz was founded to help get you the savings you deserve from overpriced services, and they alleviate the hassle of speaking with providers. There are extreme couponers who would say you’re committing a crime by paying retail, and although couponing may not be your forte, there are many smart phone apps designed to help you save.
Not checking your credit score
Since identity theft is one of the fastest growing crimes in the U.S. today, by not checking your credit score at least three times a year you may be leaving yourself vulnerable. Fraudulent charges go undetected and your credit score is ruined, making difficult to work with auto lenders, mortgage underwriters or credit card companies.
Equifax, Experian and Transunion are the three credit rating agencies, which are required to provide you with a free report once a year. Make sure to flag anything that seems off no matter how small the amount, and compare each report.