DON'T BE BARRY. Avoid making these common financial mistakes.
Mismanaging Student Loans.
Before Barry applied, he should have understood what his monthly loan payment would be and when he has to start making payments. Don’t be like Barry. Don’t borrow more than you can afford to payback.
If you already have a student loan:
- DON’T spend any left-over grant money. Put it in an interest-bearing CD account and park it until you graduate.
- If you think you’ll miss a payment, call your lender before it happens. Most lenders offer skip-a-payment or forbearance options.
Splurging on Credit Cards.
Barry didn’t know the interest rate on his credit card. He didn’t even realize that when he made a late payment, his interest rate jumped from 20% to 29%. Now he’ll be making big monthly payments long after the thrill of buying is gone.
If you can’t afford to pay cash for something:
- Don’t buy it now.
- Save a little at a time.
- Delay instant gratification and practice financial discipline.
You can do it!
Buying a new instead of used car.
- A used car is much better value than a new one.
- A new car can lose up to 20% of its value the first year
- That means you’ll owe more than it’s worth for a long time!
Certified used cars come with warranties that give you peace of mind and often come with free maintenance plans like oil changes and tire rotations.
Skipped contributing to employer-sponsored 401K Retirement Plan.
Barry thought he was too young to set aside money for his distant future. He didn’t realize saving a just few (non-taxable) dollars now could mean a big pile of money later.
Many employers match a portion of your contribution.
- Talk to your Human Resources Manager about your employer’s 401K plan
- The sooner you start, the more money you’ll have for later.
Ignoring his credit score.
Heck, Barry doesn’t even know what his credit score is or why it matters.
- Your credit score affects the interest rates on loans.
- The lower your credit score, the more interest you will pay.
- A very low credit score means you probably won’t be approved for a cell phone account, lease, car loan, or credit card.
- Some employers consider your credit score as an indicator of your sense of responsibility, and a low score may keep you from getting hired.
- Potential landlords review your credit score (and your whole credit report). Your rental application can be denied because of poor credit.
Check your credit score. Order a free copy of your credit report. Get an app that offers free credit monitoring and tips on how to improve your credit score.
Barry Doesn’t have a Rainy Day Emergency Fund.
If you drink gourmet coffee, get meals delivered or subscribe to streaming services, you can afford to start an Emergency Fund.
- Limit those expenses, and you can save $30 -$40 month:
- Set aside $20/week from your paycheck.
- Sell 1 or 2 items from your closet once a month.
Congratulations! You just painlessly saved $130 – $150/month for your Rainy Day Emergency Fund.
Barry’s biggest mistake is not having a Budget.
We can help Barry fix this mistake in just a few minutes. All he needs is a piece of paper, a pen and a calculator.
- In its simplest form, a budget is simply a list of your income, expenses, needs and wants.
- The goal of a budget is to keep you from spending more than you earn while paying your obligations and setting aside money for your needs and wants.
A BUDGET IS TELLING YOUR MONEY WHERE TO GO INSTEAD OF WONDERING WHERE IT WENT.
Don’t be like Barry. We’ve put together a few helpful articles, links and calculators here. No sales pitch… really.
