You’re Probably Making At Least One of These Home Finance Mistakes
Whether you’re saving for a home down payment, working to pay down a mortgage or chipping away at your debt, chances are you’re making at least one of the common home finance mistakes below. Read on to see what finance experts recommend to lessen your debt and build your nest egg, including avoiding these missteps:
Paying too much in housing costs
Most experts agree it’s best to spend no more than 30 percent of your monthly earnings on housing costs, but many people pay much more. This can make it nearly impossible to save for a home down payment in today’s market, and it can also mean having to take on unwanted credit card debt for emergency expenses.
Using a monthly budget
Research shows that creating an annual budget, rather than a monthly one, triggers more conservative spending among consumers. This is largely due to the fact that most of us tend to play it safe when budgeting annually, never knowing what might happen several months down the road. Annual budgets lead to less debt and more savings over time.
Focusing on credit card rewards
There are a plethora of fantastic credit card rewards programs available, and they definitely have their place in a healthy financial plan. After all, who wouldn’t want to earn cash back on purchases or rack up free travel miles? However, studies show that these credit cards encourage a phenomenon called “purchase acceleration,” which causes many consumers to buy things they simply don’t need, continuing a cycle of debt that can be difficult to emerge from.
Overspending on gifts
If you found yourself shelling out more than $900 on gifts last December, you’re not alone. The majority of consumers report spending far more cash than anticipated around the holidays. Many consumers, especially those who wait until the last minute to buy gifts, are forced to spend more simply out of necessity. A little pre-planning can go a long way toward finding budget-appropriate gifts that your loved ones will cherish.
Avoiding these common money mistakes can have a big impact on your future finances. There’s no time like the present to begin working on cleaning up your financial act.
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