So many times people think they are being money smart but they aren't. Here are some common financial mistakes people make- are you making any of them?
No one wants to make financial mistakes, especially when a lot of money is at stake. Unfortunately, too many hard-working people fall into traps like overusing credit cards, not earning a decent return on their investments, carrying too little insurance coverage, engaging in impulse buying, or ignoring the importance of credit scores. Here are pertinent details that help you avoid the most common and damaging money mistakes.
Living Off Credit Cards
The single biggest mistake young working people make is relying on credit cards to get through each month. In nearly every such case, people who dig the credit hole end up regretting it. The solution is budgeting. When you make a detailed monthly budget and pay off all card balances when they come due, the plastic curse will no longer be a problem.
Ignoring the Potential of Vacation Real Estate Rentals
Investing in real estate, particularly vacation rentals, can enhance long-term portfolios in several ways. The concept plays an even greater role in recessionary economies when stock markets are volatile and unpredictable. Working adults can sidestep risky securities markets and put their capital into tangible assets like real estate. Those considering a second home as an investment tend to focus on rental property.
However, vacation properties in resort cities or favorite holiday spots offer multiple advantages. Owners can rent out the homes for most months of the year and stay in them when they want an inexpensive way to travel. Others options include earning regular income on the holiday home and then moving into it full-time after you retire. Even homeowners with extra bedrooms in their current house can earn rental income and reap the financial rewards of owning their own home or a second one.
Being Under-Insured
It's theoretically possible to have too much insurance, but most working people err on the other side of the coin of having too little. Step one to resolve the insurance problem is to sit with a licensed agent and review your policies. It's common to have one or two types of coverage in good shape and a few others lower than they should be. The solution is getting expert advice from a trusted source, upping the limits on coverage areas where you need more protection, and then doing an annual review at about the same time every year.
Making Impulse Purchases
If you're an impulse buyer, consider making a detailed monthly budget and never shopping for anything without a written list. If uncontrolled spending is a serious problem, there are credit counselors who specialize in helping consumers who need extra help. Don't let impulsive spending wreck your financial stability.
Not Working to Improve Credit Scores
Check all three credit scores, one with each of the big three bureaus, at least once per year. Get help interpreting the reports so you'll know how to up your scores. If you find mistakes, contact the bureau directly and find out how to lodge a legal challenge to the error and have it removed from your record. Note that it can take about six months to correct mistakes on official reports.
Making Impulse Purchases
If you're an impulse buyer, consider making a detailed monthly budget and never shopping for anything without a written list. If uncontrolled spending is a serious problem, there are credit counselors who specialize in helping consumers who need extra help. Don't let impulsive spending wreck your financial stability.
Not Working to Improve Credit Scores
Check all three credit scores, one with each of the big three bureaus, at least once per year. Get help interpreting the reports so you'll know how to up your scores. If you find mistakes, contact the bureau directly and find out how to lodge a legal challenge to the error and have it removed from your record. Note that it can take about six months to correct mistakes on official reports.
