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Hey Everyone! We at ThirtynFree would like to present our first guest post! The honor goes to James Paul over at BasicFinanceCare.com. Enjoy!
Financial freedom can be achieved by taking the right financial moves at the right time. It doesn’t happen in a day but is essentially a lifelong learning process to become a pro in handling your finances. However, on one end it takes a lot of tiny and smart moves to build your wealth cloud and on the flip side, a wrong financial move can derail your entire efforts and doom your future. Sometimes, a wrong step taken on financial decision can cause a major complication that might take decades to be solved and thus spoil you entire financial plan for the future.
4 Financial Mistakes to avoid:
If you avoid these 4 financial mistakes, you can concentrate more on building your future and work towards your financial goals without any worry. Let us learn how these 4 financial mistakes become a hurdle in your financial journey:
1.Getting started with saving for your retirement very late
One of the biggest mistakes in the financial journey occurs when we don’t realize the importance of saving money for retirement as early as possible. You might be in the early stages of your career and it may seem like starting your retirement savings now may be a bit too soon. This thinking could essentially be a sure fire way to ruin your future. Unfortunately, the longer you wait to start saving; the fewer benefits you will enjoy.
Benefits of saving at an earlier age:
Your credit score is the first thing that a lender would want to see if you wish to buy a home or plan to invest on equity. Having a bad credit score can get your loan denied if you are planning to invest in a house or in buying shares. Also, a bad credit score would mean higher interest rates on the loans you can manage to get approved for. Sometimes, a poor credit score would also affect your job opportunities as potential employers will often check you credit history to gauge your level of responsibility.
To avoid any late payments, you can always opt for autopay options or set up a reminder in your cell phone. Try to minimize borrowing and get rid of the debts as soon as possible.
3. Using Credit and Debt to Buy Depreciating Assets
Using your credit for every expense you make can be one of the mistakes to cost you a comfortable future. Every dollar you pay in interest is essentially making you poorer and the lender wealthier - just keep that in mind every time you swipe that credit card. I know in some cases it is unavoidable, but one of the worst moves would be purchase a depreciating asset (like a car) with a loan. If you borrow money for education or home still makes sense as your education could increase your income and home could increase in value. If you use your credit card wisely and make repayments monthly then it’s still fine to use it.
4. Buying a house or car that you can’t comfortably afford
Before you plan to buy a house or car, define your affordable limit and see whether it fits your budget. Spending a major part of your income towards a mortgage can make it difficult to save or invest for your retirement. A car or truck is a depreciating asset as it loses its value with time. Car loans plus the maintenance can eat up your entire budget so buy what you can comfortably afford. Try to save as much as you can for the down payment so you can avoid high mortgage and loan repayments.
By simply avoiding these 4 financial mistakes, you can be financially free and save yourself from most financial headaches. Never spend on things that are out of budget and which you can’t comfortable afford.
James Paul is a personal finance blogger who write at Basic Finance Care covering everything about personal finance management and frugal living.