Bad money habits are what's weighing us down in our quest to financial freedom. Bad money habits come in big or small ways and it add up fast. Learn from these mistakes and try these tips to start paying off your debt.
1. Not Having An Emergency Fund - Rainy days often come at a time when we think everything is fine. We have to learn to be prepared for emergencies, and an emergency fund will do very well to meet the demands of unexpected payments like when your car breaks down or when your cashflow isn't doing very good. Don't force all the charges on your credit cards, or else you'll run up balances and interest that you can't afford to pay.
- Rule of thumb: 3-6 month's worth of living expenses
- Start by opening an online savings account, keeping your money safe from being spent and still keep it accessible.
- For every paycheck, do everything possible to keep 10% of that inside your savings account.
2. Depending Heavily on Credit Cards - It's so easy to swipe and charge, and it feels like getting something and not losing cash. Well, not at the moment, anyway. Though we try to keep up paying for the balance we've accumulated, it doesn't help if we ring up "small stuff" over and over. It adds to your bludgeoning debt, aside from the interest and fees. Paying with cash is the new "in" thing to do. Try to pay for things you want with cash, most especially that "small stuff" like the lattes, quick take-out meals and others. If you can't pay for it with cash then maybe you shouldn't get it yet? If you're short on cash and need the item now, opt to swipe it with a debit card.
- Pay your credit on time and don't let late fees and growing interest drown you.
- Already on the brink of a debt cliff? Pay more than the minimum.
- Find something to help you with putting in more money to pay for debt. All these extra earning should be able to help you land on solid financial ground.
- Mark payments on a calendar. Find what bills you can apply for an online payment scheme.
3. Being Careless with Your Credit History - Haven't looked at your credit report in years? You should. If you have a lot of problematic things going on financially, look into it to see what started the whole thing and from then devise a good solution. Always keep your history in check to help you get over and avoid the same mistakes in the future.
- Creditors, lenders, and even potential employers will review your credit history. The higher the score, the higher your chance for great rates on loans and interests.
- Falling behind in payments will reflect very badly on your history, and it could even get worse as creditors can raise the interest rate if you fall behind with all your other payments. WC = 512
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