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11 Money Mistakes You Don’t Realize You’re Making

11 Money Mistakes You Don’t Realize You’re Making

If you’ve got money and you know it, take it out your pocket and show it. *snatches money out your hand and runs.* Thanks.

Here are some other mistakes you’re making with your money.

1. You Buy Extended Warranties

I’ve worked at a variety of retail stores, and they all require every employee to push the extended warranty. They do this because it’s a sale where you’re giving them money for a product they don’t have to stock. They gain free money, because the odds of you actually using that warranty are slim. If your product lasts six months, it’ll last two years, unless you break it in a way that’s not covered by the warranty anyway.

“Use warranties that come with the product or service,” says financial expert Harrine Freeman. “Keep the original packaging and receipt so if an issue arises, you can get the item fixed without delay.”

2. You Have Too Much Insurance

You’re required by law to meet certain insurance requirements for your vehicle and any collateral loan. Insurance agents will push to give you more insurance because they’re commissioned salespeople. Whether it’s your car, home or body, don’t buy more insurance than you need, or you’re just paying to keep everyone else’s premiums low.

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Also avoid cell phone insurance at all costs – these plans are difficult to use and cancel, and they’ll often charge you more to replace your phone than the actual phone manufacturer, the retail store you bought it at, or your service provider.

3. You Pay for Free Services

You can monitor your credit report for free by getting a copy once every year, yet credit monitoring services charge you for the privilege. It’s like paying to park in a free lot (which you’ll also do if there’s an event nearby). Avoid paying for anything you can do for free.

4. You Upgrade Too Often

When Apple releases a new iPhone, people wait in line for it. Android users are getting just as bad. Usually, the upgrades are minor. Sure, I can use my phone as a projector, but how often does that really come up?

Don’t get distracted by all those shiny features – buy a phone within your budget, and hold onto it for 3-4 years. By the time you upgrade, you can get a free (or extremely cheap) phone that’s still an upgrade over your current one without paying an arm and a leg

5. You Ignore Hidden Fees

Banks make their money by charging fees. They’ll charge both you and the merchants you shop at as much as possible, and many businesses pass these fees on to customers. Shell, for example, charges you for using your card. Shell is also notorious for keeping their gas prices higher because they have a branded credit card that many people confuse for a store card. The reality is that card can be used anywhere, so use it to shop elsewhere.

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“Avoid using out-of-network ATMs,” adds Freeman. “Get enough cash from your network ATM on a weekly basis to avoid fees. Avoid multiple trips to the ATM during the week. Keep track of your bank balance to avoid overdraft fees.”

6. You Don’t Save

I’ve been on my grind since I was five years old. When I was 10, I got a paper route, and my parents made me put half of my money immediately into a savings account (which was actually an envelope in a file cabinet in their house because banks don’t give accounts to ten-year-olds). As annoying as it was, it was a great way to learn about savings

You don’t have to give up half your paycheck, but you do need to put a set amount aside. Treat your savings account as your most important bill – it’s for you, and you shouldn’t short-change yourself for the benefit of any bank, grocery store, service provider or anyone else.

7. You Overpay Taxes

I get that most people don’t understand taxes. I understand that feeling of starting the year with a huge tax refund. If you don’t have the discipline to save, it can be tempting to let the government do it for you.

The problem with this line of thinking is you’re giving the government free money. They deposit it and earn interest that could’ve been yours. You think you’re making a smart financial decision, but what you’re really doing is losing money. The ideal tax situation isn’t the huge refunds advertised by H&R Block and all the other accountants; it’s zero.

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8. You Buy Things You Don’t Need

If you can’t decide between an Xbox One and a PS4, the answer isn’t both; it’s neither. You may like purses and shoes, but you don’t need so many of them. Just because you see celebrities showing off all their swag doesn’t mean you should be doing the same thing. Learn to separate wants from needs and live within your means.

9. You Join Too Many Clubs

If you have a membership to Costco, Sam’s Club, Amazon Prime, and more, you’re wasting your money. Trying to keep up on all those frequent shopper clubs is toxic too. You’ll end up spending more on fees and unnecessary purchases than you’ll save from any of their deals. Their business model is set up specifically for this purpose.

If you’re single, consider asking a friend or family member to be added as an additional user on their account. A single person doesn’t need too many bulk items, especially perishables.

10. You Waste Food

Regardless of whether it’s bulk or single serving, don’t buy more perishable goods than you can eat. Every crumb you throw away is a crumb you paid for. You may as well just dump the contents of your wallet on the ground every time you go to the store.

Track your diet – it’s good for both your health and wealth. By focusing on your food intake, you’ll have an idea of your eating habits. This will help you make smart spending decisions at the grocery store. From there, all you have to do is cook the food you have instead of going out to eat all the time.

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11. You Lack Patience

Merchants love taking advantage of our impulse to spend money. It’s easiest to see this concept with movies. If you want to see a movie on opening night, you’re paying the highest price possible. You can’t even use a coupon because it’s a special engagement. If you want to see a movie in theaters, wait until it’s in the dollar theater. Otherwise you can see it on Redbox for $1 or Netflix for free. All you have to do is wait.

Now stop making money mistakes and start living like a shark.

Featured photo credit: Nuzree via pixabay.com

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Published on January 8, 2021

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

1. Pay More Than the Minimum Credit Card Payments

Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

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You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

2. Start With High-Interest Credit Card Debt

If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

3. Revisit Your Budget

Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

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Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

4. Avoid Using Your Credit Cards

Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

5. Start a Side Hustle to Boost Your Income

You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

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Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

6. Sell Your Used Items for Extra Cash

Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

7. Know When to Seek Help With Your Debt

Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

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There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

In extreme cases, the debt solution can be:

  • Debt relief – where your debt is partially or wholly forgiven
  • Debt consolidation – taking out one loan to repay others
  • Debt settlement – the creditor forgives a significant portion of your debt
  • Bankruptcy – legal process for seeking relief from some or all your debts

It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

Wrapping It Up

Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

More Tips on How to Pay Off Debt

Featured photo credit: rupixen.com via unsplash.com

Reference

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