3 scary financial mistakes that could haunt you for years
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It’s that time of year – when houses are lined with ghosts and goblins, and horror movie screenings appear all over town. And if the thought of a barrage of costumed kids knocking on your door asking for candy scares you a bit, well, you’re probably not alone.
But as scary as this time of year can be, there is nothing scarier than destroying your Personal finance by making some critical mistakes. Here are some blunders you might end up regretting for years to come.
1. Do not build an emergency fund
As a general rule, it is important to have three to six months of living expenses hidden in a savings account. That way, you’ll have cash reserves to tap into if you lose your job, run into a pile of medical bills, or suffer from an expensive home or car repair.
But if you don’t build yourself one emergency fund, you may be forced to accumulate expensive debt that will accompany you for years. Even if you end up borrowing money through a Personal loan (which won’t hurt your credit score if you make your payments on time), you’ll still have to deal with the mental load that comes with debt. And that alone could have a negative impact on you.
2. Accumulate avoidable high interest debt
Some people run into expensive credit card debt because life circumstances are not favorable to them. If you happen to lose your job and undergo major repairs at the same time, you may have no choice but to charge expenses on a credit card and pay off your balance over time, even with a strong emergency fund.
But some people go into credit card debt because they don’t watch their spending or because they typically give in to indulgences and impulse buying. It is this situation that you could deplore for a long time. Not only can credit card debt cost you a lot of money in interest, too high a balance can hurt your credit rating, making it harder to borrow money when you need it.
A good way to avoid credit card debt is to stick to a monthly payment. budget. Also, take steps to avoid impulse buying when you can. Don’t store your credit card details on your phone or laptop, making it harder to buy things on a whim.
3. Pass the chance to refinance your mortgage
If you own a home, refinancing your mortgage could make your monthly payments more affordable. And the less you spend on housing each month, the more money you’ll free up to build emergency savings and cover your bills so you don’t have to run into credit card debt. If you’re having trouble paying for your home, it’s even more important to consider refinancing.
Typically, refinancing makes sense when you can reduce the interest rate on your current mortgage by about 1% or more – and when you intend to stay in your home long enough to get your mortgage back. closing costs. If you can tick both items off your list, then it’s worth shopping around with several refinance lenders to see the rates they offer you. Comparing your choices is a good way to get the best deal on your new home loan.
We all make mistakes in life, including those related to money. Avoid these mistakes to bypass the frightening consequences that could ensue.
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