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Are you struggling to get ahead financially?
Why is it so hard to make ends meet and save for the future?
Chances are, you’re making some seriously stupid money mistakes that are costing you an arm and a leg.
From overspending beyond your means to not having any form of budget or financial plan, these common errors could leave you deep in debt and without any savings.
That’s why today we’ll be tackling the 12 most costly money mistakes, so if it feels like something is holding back your finances, this will be right up your alley!
Read on if you want to find out exactly how each mistake could be draining cash from your wallet without you realizing it.
#1. Cosigning For Loans
One of the biggest money mistakes you can make is cosigning for a loan.
When you cosign, you take on all the responsibility for that loan; if the borrower stops making payments, you are legally obligated to pick up where they left off.
This means that not only will your credit score take a hit, but it could also leave you owing thousands of dollars in debt you weren’t expecting.
#2. Picking Up A Bad Habit
We all know that bad habits can be expensive, but many of us underestimate how much they really cost.
Take smoking, for example; the average smoker spends over $2,000 a year on cigarettes and hundreds more in related costs, such as lighters and ashtrays.
If you’re trying to save money, picking up a bad habit isn’t the way to go.
#3. Not Getting A Property Tax Assessment
Most people accept the property tax they have to pay on their homes. What many don’t know is if you can challenge this assessment and get your taxes lowered.
Doing this not only saves you money today but in the future as well.
For example, your taxes are $8,000 and increase 3% annually. Next year, your taxes will go up $240 to $8,240. The year after, they will increase by $247 to $8,487.
But if you challenge and get your taxes to $7,000, the 3% increase will make your taxes $210. The following year, your taxes will increase just over $216 (round to make the example easier to follow).
The point is you save a significant amount initially and every year after that because the increase is based on a smaller amount.
In most areas, you can hire a real estate attorney to do all the work for you, and if they are successful, take a small percentage of the first year’s savings.
#4. Credit Card Debt
Many of us get trapped in the debt cycle where we buy a few things we can’t pay for and then make monthly payments on our credit cards.
We justify the interest we pay as a minor inconvenience for having the item now.
And as long as you do pay off the debt in a short amount of time, this isn’t the end of the world.
The problem is that too many people continue to add to their debt and are now paying hundreds of dollars in interest charges monthly.
If you have credit card debt, you need to scale back, pick up a side hustle, or both to pay it off.
The sooner you do, the better off your finances will be both now and down the road.
#5. Ignoring Your Health
We all like to think we are healthy, and those who know they aren’t in the greatest shape justify their health by saying they don’t have any issues.
While not staying healthy won’t cost you a fortune now, it will down the road.
When you are older, your body will begin breaking down.
This means you will be on multiple medications that could cost you hundreds a month, even with health insurance.
It’s easy to put off the doctor’s appointment or not go for a daily walk, but these simple things could save you thousands a year as you get older.
#6. Not Asking For A Discount
If you pay full price for things, you are wasting some of your hard earned money.
With online shopping, getting discounts is as easy as installing a browser extension that will automatically apply discounts to your oder.
For in-person shopping, simply ask for a discount.
Most times, the cashier will have a coupon or some discount they can apply.
#7. Thinking You Can’t Afford to Save Money
No matter your income, you can afford to save money.
Sure it might not be $100 a month, but saving even $5 is important.
This is because it makes saving a habit for you.
When you do start earning more money, you will automatically save money because you’ve been doing it all along.
#8. Using Auto Bill Pay
Our busy lives make it too easy to forget about a bill.
When this happens, you get hit with late fees, interest, and possibly even a knock on your credit score.
Thanks to automatic bill payment services, you don’t have to worry about these potential issues.
But bill pay isn’t as great as it sounds.
First, if money is tight, it could lead to overdraft fees if you don’t have the cash sitting in your checking account to pay the bill.
Second, many people who use this service never look at their bills.
They might go years before realizing they are paying for an add-on they thought was a one-time fee.
Or, they won’t notice that the price of the service increased every year and is now more than they are comfortable paying.
#9. Not Reviewing Monthly Statements
Having a budget would be a smarter financial move, but if you are totally against this, the next best thing you should do is review your monthly statements.
This includes credit cards and bank statements.
When you do this, you are looking for two things. First, you want to spot anything unusual that might point to identity theft.
Second, you want to see where and how you spend your money.
Maybe there is a service you signed up for that charges you monthly, and you forgot about it.
Reviewing your statement can remind you to cancel now instead of five years and now after paying thousands of dollars.
Or, you might see you visit fast food restaurants more often than you thought.
You can save hundreds of dollars by keeping an eye on your statements.
#10. Not Shopping Insurance
If you have been with your insurance company for more than two years, you are most likely overpaying for coverage.
Contrary to popular belief, insurers do not give loyalty discounts. If they increase rates, everyone sees a rate increase.
The only way to ensure you pay the least for coverage is to shop around and get free quotes.
This used to be a hassle, but now some companies will allow you to get multiple quotes online for free and help you switch. You pay nothing as they make their money from the insurance company.
There is no requirement you switch, so it’s a smart, easy way to ensure you are not paying hundreds more for coverage.
#11. Not Investing
A major mistake many people make is thinking they can start investing later.
The problem is the later you start, the more you need to save.
They don’t realize time is their best friend when building wealth.
The longer you can keep your money invested, the smaller you need to save.
But put off investing for ten years or more, and now you have to save thousands a month to end up with the same size nest egg.
#12. Buying Too Much of a House
This one is tough for many people since housing prices continue to rise.
And while it is frustrating to put offers on a house only to miss out on someone offering more, you must realize this is a blessing in disguise.
The last thing you want is to be house rich and cash poor.
This is when all of your money is tied up in your house.
The monthly payments are so high you have to cut back significantly in other areas of life.
Some may even go into credit card debt to get by financially.
Instead of letting your emotions decide, create a must-have list for a home and the maximum amount you are willing to spend.
Then stay firm until you find the house for you.
This could mean expanding your search, but it will be well worth the peace of mind, as most recent home buyers have major regrets of overpaying.
#13. Not Having an Opportunity Fund
We all know the importance of having an emergency fund.
But what about an opportunity fund?
This is an account you put money in for when life introduces you to opportunities.
It could be your dream job, but the pay is slightly lower than you need.
Or it could be the dream car you’ve always wanted.
We all experienced the feeling of a great opportunity coming into our lives but not being able to act because we don’t have the cash.
By having this account, you avoid this problem.
Consider if you had the money back in 2008 when home prices were cratering.
You could have bought a dream vacation home for cheap (that now has doubled or tripled in value).
You will be much happier if you save for emergencies and opportunities.
#14. Taking Out an 8-Year Auto Loan
New cars are getting prohibitively expensive. Because of this, some people are turning to longer auto loans.
While this makes the monthly payment more affordable, there are some major issues many don’t think about.
First, if you try to sell your car around year seven, you might owe more than it is worth. If you sell your vehicle for $5,000 and owe $9,000, you need to come up with $4,000 to pay off the loan.
Most people trade in their cars and roll this amount into their new loan.
This doesn’t solve the issue, it only makes it worse because now you have a loan that is more than the car is worth.
For example, you trade your vehicle and buy a new $60,000 SUV. Your loan amount is $64,000.
A year later, you decide the SUV isn’t for you and try to sell it. It is only worth $54,000, but your loan is $62,000.
Your $4,000 problem is now an $8,000 problem.
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Here are the best ways you can get free money without having to work for it.
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But with so much financial advice out there, building wealth seems impossible. Not any more. Here are the simple steps you need to take.
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Good Money Habits To Have
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Here are good money habits you need to follow if you want to take the next step financially.
Save Money On Groceries
It’s no secret that grocery shopping is a significant expense every month. While most of us know a few ways to reduce this bill, there are many other simple things we can do.
Learn the easy tricks to spend less on groceries and pocket some savings.
I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.