You shouldn’t do these 7 scary things with your hard-earned money

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By: Good Nelly
on 7th Apr,2015

Are you scared of not being able to manage your money well? It is good if you are afraid about doing anything wrong with your money.
You shouldn’t do these 7 scary things with your hard-earned money

Are you scared of not being able to manage your money well? It is good if you are afraid about doing anything wrong with your money. It will help you manage your money well. If you ask anyone, most of them will answer they do some of these 7 scary things with their money, either knowingly or unknowingly. However, stay away from committing these mistakes if you want to do justice to your hard-earned dollars.

1. Trying to keep up with the Joneses

This is a very bad habit as the competition never ends. Once you buy one item to maintain the status, to match with your peers, you'll find that there's one more item you need to purchase. This list never ends and goes on and on. Therefore, it is better to not compare yourself with others. Be happy and contented with what you have.

2. Revolving your credit card balance

Do you have the habit of revolving your credit card balance? It means not paying off your outstanding amounts at every billing cycle. If you do so, then it'll be hard for you to save money. By doing so, you can also develop the habit of not buying with cash and purchasing whatever you want to by swiping your credit cards. This will lead to debt problems, especially if you carry relatively large balance on your credit cards.

3. Not calculating interest payments

While using plastic money for a big ticket purchase, calculate how many months you'll take to repay the amount in full. Then, make a rough estimate of the interest payments for those months. Doing so, you'll be able to have an idea of the actual price you'd have to pay for the item. You never know, you might opt for saving the money and then buying the item instead of making an impulsive purchase.

4. Not having adequate liability insurance

How will you feel if a significant portion of your savings, goes toward settling an insurance lawsuit? To avoid such a scenario, purchase adequate insurance coverage. You can consider having umbrella policy. With that you can cover the liabilities over and above the coverage offered by your standard insurance policy. It is advisable to have a talk with your insurance agent to decide about the required coverage.

5. Cosigning a credit card or a loan

Your friends or relatives might request you to cosign a credit card or a loan if you have a good score, such as more than 700 or 750. However, before you cosign, know that you're responsible to repay the debt if the other person defaults on the loan. Quite naturally, your good credit might also drop. Therefore, before you cosign, be absolutely sure that the other person will stay current on the loan.

6. Forgetting to pay bills every now and then

There is no harm in forgetting to pay your bills late once in a blue moon. However, you shouldn't do this every now and then. Otherwise you'll lose dollars paying the late fees for your mortgage, credit card and/or utility bill payments. So, set a reminder to pay your bills on time. You can also set a particular day of the week, say Monday, when you'll check the bill payments and pay the bills which are due till next Sunday. This is one way how financial confident people manage money.

7. Developing frivolous spending habits

Everyone has some kind of frivolous spending habits. However, you need to make your priority list. For example, you might give yourself allowance to eat out once or twice a month. Each time, if you spend $20-30, then calculate how much it'll amount to in a year. Doing the calculations might help you change your habit or set your priorities as per your budget plan.

One of the most scariest things most people do is having no budget or spending plan. However, without a budget plan, you can never analyze where your money is going. As a result, it can increase your overspending habit and you won't be able to save what you want to. Therefore, stop committing this scary thing with your money. Right from this month, devote some time to plan a budget. With practice, you'll be able to plan a suitable and realistic budget which you'll be able to follow and meet your financial dreams and aspirations.

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