Wednesday, July 17, 2013
Creating a personal financial management plan can seem complicated.
But it doesn't have to be that way. Sarah Kaufman of Manilla.com says there are some financial lessons to avoid learning the hard way.
Here are some of those money mistakes Kaufman says we should avoid making over the long term.
1. Have a solid get out of debt plan.
The average American household has $15,000 in credit card debt, over $33,000 in student loan debt and nearly $150,000 in mortgage debt. It's essential to create a concrete plan to pay your debts as fast as possible.
2, Paying the minimum payment can create large interest payments.
When you play only the minimum balance, only a very small percentage is going toward the principal balance; the rest will go toward interest. Try to pay as much over the minimum balance as you can.
3. You can improve your credit by tracking your spending.
Try to make a habit of using a debit card or cash when making purchases, rather than a credit card. Track your spending or use account management software on a computer.
4. Late payments come with consequences.
Paying your bills late can result in hefty late and penalty fees, and can lower your credit score in some cases. So pay your bills on time. Tie payments date to a calendar, if you must.
5. Home ownership isn't for everyone.
You'll need enough money to put 20 percent and be able to qualify for a mortgage. To do that, you'll likely need to have savings and a minimal debt-to-income ratio and a stable income. Otherwise, rent until you can save enough money to meet these requirements.
For the rest of the lessons and to see Kaufman's entire article, click on the link.