Here we’ll have a look at three of the most common financial mistakes that often lead individuals to major financial hardship. Steering clear of those mistakes may be the secret to survival if you’re already facing financial difficulties.
1. Living on Borrowed Money
Using credit cards to buy essentials has become somewhat routine. But even if an ever-increasing number of customers are willing to pay double-digit rates of interest on gasoline, groceries and a lot of other items which are long gone before the invoice is paid in full, do not be one of them. Credit card interest rates make the purchase price of the items for a good deal more expensive.
2. Purchasing a New Car
Few buyers can afford to pay off the money for the millions of cars are sold each year, and the inability to pay cash for a new car means an inability. After all, being able to afford the payment is not the same as having the ability to pay for the car. Furthermore, by borrowing money to buy a car, the consumer pays attention to a depreciating advantage, which computes the difference between the value of the car and the cost paid for it. Yet, many people eliminate money and trade in their cars every two or three decades.
Occasionally a person has no choice but to take out a loan to buy a car, but does one consumer really need a large SUV? Such vehicles are expensive to buy, plus insurance and fuel. Unless you tow a boat or trailer or need an SUV to make a living, is an eight-cylinder engine worth the additional expense of taking out a big loan?
If you need to purchase a car or borrow cash to do so, consider buying one that uses less gasoline and costs less to insure and maintain. Cars are expensive, and if you’re buying more car than you want, you’re burning through money that could have been stored or used to repay debt.
3. Spending Too Much on Your Home
When it comes to buying a house, bigger is not necessarily better. Unless you’ve got a large family, picking a 6,000-square-foot home will only mean more expensive taxes, maintenance, and utilities. You might not need to put such a significant dent in your budget?
