Everyone makes mistakes sometimes. Check-in with this list to make sure you aren’t making any of these five ones in particular — they could be costing you money!
1. Living Without a Budget
If you don’t have a budget, there’s a good chance you don’t have any real idea of how much money you spend each month. While you might know the big expenses — rent, groceries, and utilities — it’s easy to lose track of all those little, unplanned purchases.
The small things can sneak up on you, leaving you with less money to use on essentials, savings, and even fun splurges.
2. Borrowing Money When You Don’t Have To
Living without a budget means you may not be saving as much as you should. When you save in fits and starts, you may not have enough cash to help you with an unexpected repair to your car.
If you can’t delay these repairs, an online line of credit can fill in the gaps in your savings. Some lenders, such as Fora, make it easy to research what it takes to get a line of credit online. If you see what you like, you can fill out a simple application form for Fora Credit to see if you qualify.
But what if you can delay those repairs?
Some auto repairs aren’t as urgent once you give yourself time to think. Your mechanic may be able to perform a patch job that gives you some time to come up with cash on your own. Alternatively, you might be able to rely on transit or carpooling until you can afford your repair.
3. Paying the Minimum Every Time
If there’s no way around using your line of credit, avoid making the minimum payment. The minimum is the lowest amount you must pay to avoid late fines, so most of your balance will remain.
Your balance will carry over into the next billing period, subject to additional interest and finance charges. These fees will continue accruing until you bring your balance to zero, even if you don’t withdraw against your line of credit again.
Always try to pay more than the minimum to keep these fees to a minimum. Even if you can’t pay your full balance, paying the most you can is a good idea.
4. Having No Debt Payment Plan
If you’re like most people today, you don’t have just one line of credit to worry about. You probably have a few personal loans and credit cards to juggle, too.
The more debt you owe, the harder it is to know how to pay these loans back with intention. There’s a good chance you probably spread your extra cash equally between these accounts.
A debt payment plan can bring clarity to this problem by focusing on what really matters. Pick between the snowball and avalanche methods to help you maximize your debt-paying powers.
5. Saving with a Single Focus
One savings account is better than none, but you need at least two to increase your financial security. One for emergencies to help out when you don’t anticipate your costs properly, and another for retirement.
The 50/30/20 Budget recommends saving 20% of your take-home pay every month. Return to your budget to find out what that is and split it between a high-yield savings account (for emergencies) and a tax-sheltered fund (for retirement).
Bottom Line:
Mistakes are learning opportunities. If you make any of the mistakes on this list, take the time to change.