Financial mistakes are no laughing matter. Even small
mistakes, like buying an article of clothing that is out of your budget, can
have consequences, such as making you fall behind on a bill or struggle until
your next paycheck. Big mistakes, though, can have absolutely drastic
consequences that you may end up paying for for years! Read on to learn about
some big mistakes people frequently make and how and why you should avoid them!
Mistake #1: Taking Cash from Your 401(k)
Most 401(k)s allow you to borrow money from your plan
without much hassle. As easy as it may be to get that money, however, paying it
back isn’t always so simple. You’ll have up to five years to pay it back in
most cases, but the interest will grow the longer you take.
Plus, you’ll be tapping into money that you need for
retirement, and, in most cases, you’ll also have to deal with reduced or even
suspended contributions from your employer as a consequence. Furthermore, that five year deal is usually
only good while you’re with your employer. If you change jobs or get laid off,
the money will come due much more quickly and can result in a lot of fines and
fees if you don’t pay it off within the requisite sixty days. Thus, it’s smart
to find other ways to get money when you’re strapped for cash
Mistake #2: Only Making the Minimum Payment
on Credit Card Bills
Ah credit cards. If used responsibly, they can
be a wonderful way to pay for things you need but can’t afford outright and to
build your credit in the process. If used irresponsibly, however, they can be a
nightmare that ruins your credit.
Obviously, it’s best to avoid charging huge
amounts, meaning more than you can really afford, on your card. But, if you’ve
already reached that point, then don’t make things worse by paying only the minimum
payment. This is an easy way to add huge amounts of interest to your bill and
to never get out from under the quickly mounting debt.
If you’ve found yourself with a too-high
balance, stop making additional charges right away. If possible, see if you can
transfer the interest over to a lower-rate account. And, no matter what,
always, always pay more than the minimum amount. Pay double it if you can, but,
at the very least, go a little bit above the minimum amount if you ever want to
find a way out of debt.
Mistake #3: Not Planning for the Future
Finally, no matter what your age and no matter how far away
retirement may seem, do not put off planning for it. In fact, the sooner you
can start saving for retirement, the better. The future always arrives faster
than you think, and not planning for it could set you up for disaster.
So, there you have it- a few financial mistakes to avoid at
all costs. There are others, of course, and having a good financial adviser to
keep you on track and keep you from making these mistakes is the way to go.
No comments:
Post a Comment