Don’t Be a Financial Fool
Today is April Fool’s Day. Most people love a good prank, but when it comes to dealing with personal finance issues, it’s not a laughing matter.
Today we will bring awareness to the foolish money mistakes that most of us make so that we can avoid them in the future.
Having a non-structured debt repayment plan
When it comes to making payments towards your debt, you should have a specific repayment plan in place or you can find that your situation will get worse. Instead of making small payments on all of your debt-ridden accounts, hit the account with the biggest debt or highest interest rate first. This will bring down your balances in a more strategic manner.
Using your retirement to send your kids or yourself to college
Any good financial planner will strongly advise parents against using their retirement savings to pay for college expenses. The cost of tuition and fees for private colleges have tripled over the past 40 years and have quadrupled for public universities and colleges. To lessen the strain of paying for college, you have several options besides seeking grants or scholarships. Starting your college career off at a community college will lessen the financial strain that comes with seeking a higher education. Also don’t be afraid to suggest that your college student learn time management and get a job to help cover some of their college expenses.
Overdrafting your checking account
With all the apps and free services that banks offer to help you keep track of your account balance, you should never incur bank fees due to overdrafting your bank account. Financial institutions can charge anywhere between $5 to $100 for overdraft fees. You already pay an institution to hold your money anyway, so it doesn’t make sense to give them more of your money because you are too lazy to check the status of your account balance regularly.
Procrastinating on purchasing life insurance
When someone dies, the first question that is usually asked is “Did they have life insurance?” If the answer is yes, then the family of the deceased won’t have to worry about household income changes or coming up with money to take care of associated funeral expenses. If the answer is no, then if you pass away suddenly, your family may have to struggle and take up a public donation to bury you in a respectful manner. With death being one of life’s few guarantees, there is never any good reason to delay getting a life insurance policy.
Paying for services you and other items that you don’t use
Most people are paying for services they don’t use without even knowing it. Phone companies trick you into thinking that unlimited text messages and calling is the best way to go, even if you know that you rarely use those services regularly. You pay a monthly gym membership, but you haven’t been to the gym in months. And the list goes on. If you aren’t using a service that you are paying for, then get rid of it. Cutting costs on unneeded services can end up saving you hundreds of dollars a month.
Not investing in your employer’s 401(k) plan
One of the biggest mistakes that you can make when setting up your retirement plan is not taking advantage of the 401(k) program offered by your place of employment. Especially if your employer offers a 401(k) match program. If you don’t take advantage of this, you are virtually throwing away free month that could potentially expand the life of your retirement nest egg.
Jessica Williams is Consolidated Credit’s Marketing Communications New Media Coordinator. As a member of the education team, Jessica focuses on helping consumers make better financial decisions while living debt-free. She has previously worked with Take Stock In Children, where she was a mentor and communications specialist, and SouthPromo.com, where she managed community relations, event planning, marketing, and public relations. Jessica attended both the University of Florida and the University of Central Florida where she received her B.S. in Interpersonal/Organizational Communications and Marketing. Connect with Jessica on Google+.