Biggest money mistake you’re likely to make: You rent an apartment or you buy a condo with a monthly fee. No problem- you’ve calculated the cost and it is well within your budget. The question is: Will it still be in your budget next year? What about the year after or three years down the road? Among the three things that are certain in life; death, taxes, and rising rents and condominium fees. They rarely drop. They usually rise every year. When making a commitment such as an apartment or a condominium it may be a good idea to create not a 12-month budget but a 24 or 36-month budget or even longer.
TIP ONE:
You buy something you see and want even though you never considered it before. Why are you driven to it? It’s on sale-maybe 10 or 15 percent off. If you put that purchase on your credit card and carry a balance you could be wiping out much or all of your savings in the interest you’ll pay. I recall a viewer once applied for a financial make-over segment we were preparing because she was drowning in debt.
Upon arriving at her house for the interview I noticed a closet full of clothing with the tags still on each piece. Her top reasons for buying them were: They were on sale, they were the size she wanted to get down to (but never did) and she thought she could sell them at a profit. She tried a neighborhood garage sale but there were no takers! Do you have self-discipline? Time for a self-exam.
TIP TWO:
You are buying a house and the mortgage company approves you for a nice loan. That doesn’t mean you can afford it, it only means they calculate that you should be able to afford it based on your income. They may not have considered ALL other costs you incur in a month. Your personal cost of living (food, entertainment, travel, etc.)Experts say shoot for 10-15 percent below what you qualify for and if there’s money left over bank it!
TIP THREE:
You rarely check on subscriptions that come to the house. Are any of them auto-pays, the cost automatically comes from your credit card without you renewing the subscription? In some cases, they renew automatically forever until you notify them in writing that you want to cancel. A Yahoo study found a third of Americans are paying for at least one subscription without knowing it because of automatic renewals and auto-payment programs!
TIP FOUR:
If you’re closing a bank account— keep checking the balance- make sure it’s zero. Even after closing an account and withdrawing all funds it may still be possible for an electronic deposit to be made! I’ve seen it happen. The bank confirmed to me that they will still permit money to be deposited into a “closed” account. It may be the remainder of interest from past accounts, maybe a refund from an auto-pay account. Even if it’s just pennies it could register account activity that may trigger fees. Make sure you take the money — and ask for the fees to be removed. Full disclosure: it happened to me! Yes, they took care of it after making three phone calls and a personal visit to a branch.
Thanks for reading!
— Murray
