4 Financial Decisions You'll Likely Regret
I try to live life for today and I've seen enough to know that life's too short. Therefore, I try to do whatever I can to enjoy time with friends, family, my dogs, and myself. That might mean spending money sometimes, which is okay...as long as it's worth it to me and I can afford it. However, there are some crucial financial decisions that may not be fun, but are necessary. So here is my list for the top 4 financial decisions that you will probably regret:
- Not saving enough for emergencies. Trying to come up with a large chunk of change when something unexpected happens is stressful and can lead to using credit cards as your "safety net". More payments can equal falling short each month in your budget.
- Not saving enough for retirement and taking advantage of 401k/403b employer match. I still have quite a few years left until I can retire, but I've been contributing to a retirement account since I was 21. For the first 2 years, my employer matched up to 4% and I only contributed 2% because I was 'living in the now' and wanted my money right away. Since I figured out what I was missing out on, I've taken full advantage of the employer match. It all adds up!
- Using credit cards without paying them off monthly. This is a biggie because like #1 above, it can cause major stress when you have to find room in your budget for yet another payment. And the more you charge, the higher your payment gets. Plus, when you reach credit limits, your credit score will go down.
- Buying 'too much house'. This can be a ripple effect starting with the 'living paycheck to paycheck' cycle. Then, you find that you don't have enough money to really enjoy life and DO things that you want to do...aka being 'house poor.' Not to mention, if you're spending half or more of your monthly paychecks just on the mortgage/utilities/insurance/taxes, it's probably almost impossible to save for emergencies. And if something comes up, the vicious cycle credit card use begins and life in general then becomes not affordable because you're just trying to keep up making payments on everything.
Another one that could be on here is student loans. My best advice for those in school would be to borrow only what you need for tuition and books and avoid taking out the full amount that you're awarded. Sure it's nice when you get the money, but down the road it'll add up and you'll have to pay it all back with interest.
With that said, don't let regrettable financial decisions you've already made hold you back from living the life you want.
Start taking action ASAP on building savings/retirement and paying off debt. If you are 'house poor' just do what you can to make other cuts so that you can still enjoy your house and your life. Or, if you can earn more money that's a great way to make your home more affordable. What's your biggest financial regret?
For more personal finance tips, check out 4 tips to pay off your student loans faster and Easy ways to increase financial wellness. If you already have balances on your credit cards and it seems like it's taking forever to make progress, a Debt Management Plan with LSS can help you pay off your debt faster. To see if it's right for you, get started online with your free online counseling session or call us at 888.577.2227 to schedule one over the phone, via Skype, or in-person. We'll give you tools and resources to help you improve your bottom line and conquer your debt for good. Author Elaina Johannessen is a Program Director with LSS Financial Counseling.