Don't Make These Major Money Mistakes
If you’re strapped for cash, don’t make your situation worse! There are some major money mistakes to avoid, according to USA Today.
First, don’t dip into your retirement money! IRAs and 401(k) plans are protected from bankruptcy, but if you use the money in those retirement accounts and fall into bankruptcy, you could lose it all and have nothing for the future!
Another money mistake is letting your home fall into foreclosure – or simply walking away from a mortgage! If you’ve been out of work for a while and can’t afford your house, experts say sell it, move into a less-expensive place and start saving money. If you still have money coming in, ask your mortgage company if they’ll suspend or lower your payments – called “modifying” your mortgage. For help, go to MakingHomeAffordable.gov. If you just walk away from your house, you’ll trash your credit for years.
Money mistake #3 - using credit cards to buy more than you can afford! Almost 15% of families now owe about half their income to credit card debt! If you only make the minimum monthly payment, it could take a decade to pay off the balance. A credit card is a convenience – not something to live off of. Sokeep the card with the lowest interest rate and stop using the rest.
What’s another money mistake? Co-signing a loan! You might think you’re helping out a friend, but imagine if you were stuck repaying the entire amount of that loan? It could happen, especially if you co-sign for a boyfriend or girlfriend and the relationship falls apart!
Also, getting a payday loan can be a mistake. It’s a cash loan you agree to pay back with your next paycheck, but the interest rate is sky high! If you’re late paying it off, you’ll owe twice as much as the loan!
Lastly, here’s a money mistake a lot of older people make: taking out a reverse mortgage on their house! Retirees often need more than their government checks to get by, but there are a lot of fees attached to a reverse mortgage. Instead, get a home equity loan, or sell your home and move into something cheaper.
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