Everyone has money problems, right? Or do they? These common financial mistakes can mean the difference between living under severe stress or having a safety net to get you through the tough times. Imagine not having to worry about money anymore! Stop making these mistakes, and you won’t have to:
Living Paycheck to Paycheck
No one actually wants to live paycheck to paycheck, but it often just becomes a habit. Sit down and take a hard look at your finances. Do you really need to spend every single dollar? What happens if you have an emergency? Would you have to get a loan or a cash advance? It’s time to make some choices about how you’re spending your money and whether you need additional income.
Excess Spending
How do you spend your money? Do you splurge on big, expensive items? Do you buy a lot of cheap little things? Whip out your calculator and add up how much your coffee, lunches out, and movie nights cost. $25 a week on lattes adds up to $1,300 a year, which is a big chunk of change that could go toward paying down debt. Create a budget and stick to it.
Credit Card Addiction
How often do you use your credit cards – occasionally or all the time? If you’re using your credit cards for gas, groceries, and day-to-day items, you’re probably spending more than you make. Using a debit card or cash will force you to spend only the money you have, and you’ll avoid unnecessary interest while you’re at it.
Automatic Monthly Payments
If you’re trying to cut your monthly expenses, double check your subscriptions for cable television, video games, and other apps. These payments will go on forever and add up to some serious bucks over time. Cancel anything you don’t use.
Buying New Instead of Used
Unless you can pay for a vehicle in cash, consider choosing a used car instead of a new one. Simply put, cars are a terrible investment because you must pay interest on an asset that’s losing value every day. A used vehicle will be less expensive to buy and more affordable to insure.
Buying Too Much House
It’s tempting to buy a larger, more expensive house because the payments aren’t that much more a month over thirty years, but remember that you need to maintain the home and pay taxes on it, too. Larger yards and bigger homes are going to be more expensive when it comes to maintenance, renovations, and repairs, and you’re committing to that for a long time.
Relying on Home Equity
Using your home equity for weddings, vacations, and other large expenses is essentially treating it like an ATM machine. The point of owning a home is to build equity and avoid paying as much interest as possible, not so you can have extra money to spend. Don’t fall into the trap of cashing out and refinancing.
Moving Forward
Avoiding these common mistakes will help you put you on secure financial footing. Living within your means and managing your expenses will give you the freedom you’re looking for, and less stress, too!