5 Dangerous Money Pitfalls to Avoid

Clayton
8 years ago

From a 1,000-foot view, your finances look to be in order. You have a steady income, you pay your bills on time and you may even have a little extra cash with which to splurge on occasion. But unless you’re thinking ahead and protecting yourself from the unexpected, your finances may be a disaster waiting to happen.

Keep your costs manageable – now and in the future – by avoiding these five common and costly money mistakes:

1. Putting your home loan on the backburner. Ignoring your mortgage may mean you’re missing out on big savings in your monthly mortgage payment – especially with interest rates currently at historical lows. Touch base with your trusted mortgage banker on a regular basis to make sure you’re getting the most out of your home loan.

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2. Procrastinating with your credit score. Having a good credit score is like having the world’s best coupon book for all of life’s major financial transactions. However, if you wait until you need a new credit card or loan to work on your credit, it may be too late. Improving your credit score can take several months depending on your situation. Don’t wait – take a peek at your credit score for free and find out your potential for improvement by visiting Quizzle.com.

3. Waiting to save for retirement. Compound interest – or earning interest on your interest (plus your contributions) – can make delaying retirement savings costly. Consider this: If you invest just $1 when you’re 20, it will be worth 1.75 times more than $1 invested when you’re 30, 3.5 times more than $1 invested when you’re forty and seven times more than $1 invested when you’re fifty.*

4. Skipping out on health insurance. If you wind up in the hospital without health insurance, it will cost you. In fact, nearly two-thirds of bankruptcies in the United States are considered medically-related, according to a study published in The American Journal of Medicine. Medically bankrupt families without insurance had on average $26,971 in out-of-pocket expenses, the study found.

The Obama Administration claims that its new Health Care Reform plan will make health insurance more affordable and accessible to more people – hopefully reducing the strain of medical-related financial hardship. Under the plan, 95 percent of Americans will be insured, according to the White House.

5. Neglecting to save for a rainy day. Just like health insurance, it isn’t easy to see the benefits of a rainy day fund until you need it. But if you don’t have savings to dip into if you lose your job or incur a major, unexpected expense, chances are expenses will wind up on a credit card, forcing you to pay interest on your emergencies. Avoid the financial burden of the unexpected by saving three to six months’ worth of expenses.

Putting away a few dollars now could save you big money in the future. When managing your finances, think beyond just the moment – and always consider what’s best for the long-term.

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Find out if you can save money with a new home loan or pay off your mortgage sooner by visiting Quizzle.com, where you’ll get free personalized home loan recommendations. Or contact our trusted partner, Quicken Loans, now to discuss your options with a home loan expert.