Eek! Not managing your money properly can have some frightening consequences.
These five bad habits may be holding you back from your goals, but it doesn't have to be that way. See if you're guilty of these terrifying tendencies, and what you can do to remedy them.
The Federal Trade Commission conducted a study that found one in five people have an error on at least one of their credit reports. It’s essential to get your free yearly report from AnnualCreditReport.com and review it for any mistakes that could damage your credit rating. A lower score can lead to higher costs for credit or even denial of a loan down the road.
Carrying a credit card balance is not a good thing. Don’t let your balance exceed 30% of your credit card’s limit; any higher and it will adversely affect your score (plus it costs you more in interest). The American Bankers Association suggests the following for people haunted by credit card debt: Pay as much as you can, as soon as you can, and always pay by the due date. In a way, credit cards are just high-interest loans — and that means there’s a lot of money going to your creditor that could have been in your pocket. Check this out:
If your entire paycheck disapparates by the end of the month, you’re not alone. Equifax reports that nearly 80% of Americans are spending their entire income every month. This is a scary place to be! You’ve got no cushion: If your car needs repairs or your kid breaks an arm, how do you cover the extra expense? This is why building an emergency fund is so important. Experts recommend saving at least six months of living expenses, but if that goal seems too big, start with a goal of one month and work your way up.
If you’re spending more than you make, you’re likely racking up debt to maintain a particular lifestyle. But we’ve already addressed the downsides of credit card debt. If you’ve got brand-name taste but a no-frills budget, it’s time to shift your paradigm. Limit your spending to what you can afford, and focus on efforts that help build your wealth (like owning your home or investing) so that you will be able to afford those luxuries a little later.
Maintaining your home means nipping problems in the bud before they get to be monstrous. A dripping tap is merely annoying; a burst pipe can be a tragedy. Not only is there water everywhere, but now you have to worry about fixing the pipe, floor and subfloor damage, and possibly toxic mold. But there are other reasons to maintain your home as well. Equity in your home can be a significant portion of your overall net worth. And if you decide to sell your home, you’ll make a lot more off it if you don’t have to plow a ton of moolah into repairs before you even put it on the market.
Beating these money-sucking monsters takes some sacrifice and hard work, but it’s worth it to get those financial bogeymen off your back.
We are not a credit counseling or financial advisement firm. This information is for educational purposes only and is not to be taken as guidelines or guarantees to improve your credit or financial situation or eligibility to secure a home loan.