Unless one is a money expert chances are they are going to make some significant mistakes with the handling of it throughout their lifetime. I certainly have and most likely will continue to do so in the future. However, there are some ways that I can reduce this. I can do it by expanding my knowledge of what common mistakes are. This way I just might be able to learn from the mistakes of others, be it by using an equity release calculator or some other trick of the trade.
There is an old saying which is the champagne taste on a beer pocket. What this means is that some people have very expensive tastes for things in life that they really cannot afford. This is more common than what you may think. This is not one of those mistakes where I am going to learn from others. This is because it is a mistake I am guilty of. I am now paying the price with hefty interest rates on my credit cards. It was just far too easy to pull out the plastic for things that I thought I needed but really didn’t for the most part. To correct this problem I took some dramatic steps. First, I reduced the number of cards that I had to two. Then I set a budget for how much I was willing to put on these cards each month. I made it a priority to make at least double payments. This gave me far more control over credit card spending.
All too often when people buy a car it is the one they want and not really the one they need. In my case as a single person I wanted an SUV so I had plenty of room for all my sports gear. I soon discovered that I only needed a third of the room this vehicle was providing me. It just didn’t justify the cost of fuel, maintenance and insurance. I am now ready to buy a new car but it won’t be based on what I want but what I need. I don’t need a brand new car. A quality used one will work just fine for me, and I’m even considering changing my insurance providers, as well as the type of payment plan that I’m going to utilize when I do get my new car. I have to admit, I do like the sound of a pay monthly car insurance premium so I can spread my payments out over a certain length of time instead of having to pay for it all in one go. If this can help me to save even more money, then it’s definitely worth a try, right?
One of the most important investments that an individual will make is buying a home. The first adventure of buying a home is an exciting one. It is the time when a lot of people overextend themselves. They are so taken in with everything the house has to offer that they will max. out on what they can handle as a mortgage. Although it is difficult, the first time home buyer really has to study what they are paying for and what impact it will have on their finances, as well as the equity of the building. Is that heated workshop really worth it? Or do you need that inground swimming pool? Sometimes the answer is yet, and if so then it may be worth the price.
One of the advantages of owning a home is being able to build up equity in it. This can be a valuable source of funds in the future. What happens though is some people use this as a bank and draw on it for expenditures that are not necessary. Home equity can play a very important role in retirement if it is left to accumulate.
The interest paid on savings is a lot less than the interest being paid on most debt. I liked the security of having money in the bank. But, I realized this was not realistic. I still maintained emergency savings but I focused more on paying down the debt.