It pays to stay away from these financial errors at all costs. It’s that time of year again, when the streets are strewn with ghosts and goblins, and horror movie screenings abound. And if the prospect of a swarm of costumed children hammering on your door demanding candy makes you nervous, you’re not alone.
But, as eerie as this time of year can be, nothing is scarier than ruining your personal money due to a few fundamental mistakes.
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Here are some mistakes you may come to regret for years.
Not putting money aside for an emergency.
It’s good to have 3 to 6 months’ worth of living costs stashed away in a savings account as a general guideline. If you lose your job, have a stack of medical bills, or need a pricey home or auto repair, you’ll have cash reserves to fall back on.
However, if you don’t set aside money for an emergency, you may find yourself in a situation where you’re forced to take on expensive debt that will follow you for years. Even if you borrow money through a personal loan (which won’t harm your credit score if you pay on time), you’ll still have to cope with the mental stress that comes with debt. And that alone could have a detrimental impact on you.
Taking on unnecessary high-interest loans
Because life hasn’t been fair to them, some people have racked up significant credit card debt.
Even if you have a large emergency fund, you may have no choice but to charge expenses on a credit card and pay off the balance over time if you lose your job and have a major home repair at the same time.
On the other hand, some people get into credit card debt because they don’t keep track of their spending or because they frequently indulge in indulgences and impulse purchases. This is the predicament you may have been lamenting for a long time.
Credit card debt can not only cost you a lot of money in interest, but it can also harm your credit score, making it difficult to borrow money when you need it. Sticking to a monthly budget is a solid approach to avoid credit card debt. Also, wherever possible, avoid impulse purchases.
Avoid storing credit card information on your phone or laptop to make impulse purchases more difficult.
Ignoring the opportunity to refinance your mortgage
If you own a home, refinancing your mortgage may allow you to lower your monthly payments.
And the less money you spend on housing each month, the more money you’ll have to save for emergencies and pay bills so you don’t have to rely on credit cards. It’s even more vital to look into refinancing if you’re having trouble affording your property.
As a general rule, refinancing makes sense when you can save 1% or more on your existing mortgage interest rate and plan to stay in your house for long enough to repay your closing expenses. If you can cross these items off your list, it’s good to shop around for rates from a few different refinance providers. Comparing your options is an excellent method to get the greatest bargain on a new mortgage. We all make mistakes in life, and financial blunders are no exception. Avoid these blunders to avoid any potentially terrifying repercussions.