If you are like many Americans and looking to push reset on your financial future, you are going to need to avoid some common mistakes that can have long-term impacts on your finances.
Let’s look at 3 financial mistakes that a bit of planning can help you avoid altogether.
Not Building Your Emergency Fund
While they will vary in type and severity, there will always be emergencies popping up from time to time. Some of these can be planned for and some of them are completely unpredictable. But one thing all emergencies have in common is the ability to derail a budget and throw your finances totally off-course. Even emergencies such as a health crisis or injury come at a cost, as you may have to miss work or purchase medicine.
Building an emergency fund is an absolute must for moving forward. Whether the car breaks down at the end of a long day or the air conditioner goes out in your home on the hottest day of the summer, there will always be an unexpected expense around the corner. Don’t get left wondering how you will pay for this new problem. Build your emergency fund now and maintain it as you plan for the future.
The Joneses Are Not Your Friends
The Joneses aren’t trying to keep up with you, so don’t waste your money and energy trying to keep up with them.
Whether it’s a new outfit or a new car sitting in the driveway, there will always be some new thing to buy, unless you learn to only keep up with yourself. You have your own tastes and your own needs, and if you apply this idea to your budgeting goals and purchases, you will have more success than if you spend based on other people’s spending habits.
It’s easy to fall into the trap of feeling like you need the next big thing, whether that’s a new phone or computer or any other thing that changes style with each season. This is a recipe for disaster, and if left unchecked this type of spending will lead to relying on credit you can’t afford.
Your goal for the year is to start pulling yourself out of debt, not digging a deeper hole. Your phone does not need to be replaced just because a new one came out. Steer clear of this type of thinking and focus on your goals.
Not Prioritizing the Right Debt
If you are looking to improve your financial situation and escape from credit debt, you need to be sure your payment priorities are structured properly. Not all debt is the same, and not all debt comes at the same cost and interest.
Paying off high interest debts such as maxed-out credit cards must become a top priority. This is the only way to escape the cycle of payments that only cover the interest and never touch the principal.
This is where CreditGUARD can really be a lifesaver.
Through our debt management program, our certified credit counselors can talk to creditors on your behalf and work toward lowering certain interest rates and combining payments so that your highest priority debt is paid off first. They are ready to help you work toward a monthly budget you can manage. Call CreditGUARD and get back on track today!