Everyone makes a mistake with money once in a while…perhaps a careless purchase, an impulse buy, or truly falling on hard times when you have very little income and have fallen on credit cards or high interest loans to scrape by. The good news is that anyone can recover from a financial error, but it’s going to be much harder to do with certain mistakes. Money can be a stressful topic – often it is the single thing that ends marriages or causes emotional upheaval and/or depression. Keeping a tight reign on your finances will serve you well in multiple ways.
Three Financial Errors To Avoid
- Missed and late payments
- Buying a home you can’t afford
- Paying Only Interest on any Loan
Missed and late payments – whether they are house, car, or student loans – do more than just set the maturity note on your loan back. The real problem is that they absolutely destroy your credit. Your biggest indicator of credit is whether or not you pay your bills on time. Missing three payments can start the foreclosure or repossession process as well – this is truly a situation of the sooner you take care of it, the better. Reach out to your mortgage company and find out what programs they have available if you are struggling. Ignoring the problem won’t make it will go away – but it will get your home taken and your credit score to drop several hundred points. There’s nothing worse for your credit health. If you have to set up automatic payments to remember to make payments on time, do it. It’s worth it.
Buying a home you can’t afford is something that many people feel pressured to do. Many people don’t realize that they really should not be spending more than 30% of their income on a mortgage payment, or maybe less if they have many loans and excessive student loans. Regardless, there is nothing worse than being “house poor” – living in a big, beautiful home, but being unable to afford to furnish it or to eat well. People cannot maintain this lifestyle and will fall behind on their payments, and catching up is nearly impossible. It’s far better to live beneath your means.
If at any point you find you’re only paying interest on a loan, that’s a problem. You’re making zero headway and only lining the loan company’s pockets. Try to make more than the minimum payment, or see if you can refinance or consolidate. See a financial planner for assistance with this no-win situation.
Are You Thinking of Buying a Home in Dubois County?
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