6 Money Mistakes Pretty Much Everyone Makes
Don’t worry, you’re not alone
You pride yourself on having a good grip on your finances…or do you? Here, six mistakes you might be making. (It’s OK--they’re easy to fix.)
YOU DON’T HAVE A SOLID STRATEGY FOR PAYING OFF DEBT
Sure, making the minimum monthly payments on your credit cards is a good starting point, but if you don’t focus on the big picture--like the total amount of debt and how much your APR adds to it--you can seriously hurt your bottom line. A better approach: Keep making your monthly payments, of course, but get a grip on exactly how much you owe so you can come up with a plan for paying it off. (For example, the snowball approach, where you knock out the smallest debt first, or the avalanche, where you tackle the card with the highest APR.)
You overspend on (or forget to budget for) gifts
No, we’re not just talking about the holiday season, but rather the fun (and not always expected) celebrations that spring up throughout the year, like your nephew’s graduation, your cousin’s wedding, your BFF’s 40th birthday. You might not keep tabs on these expenses, but $50 here and $100 there really adds up. To stay on top of it, try adding a separate budget line for gifts or give yourself a spending cap on occasions for others. (C’mon, you’ve known about that wedding in Tulsa for aeons.)
YOU USE YOUR DEBIT CARD TO RESERVE RENTAL CARS OR HOTEL ROOMS
As long as you swap it for your credit card when you check out, it’s all good, right? Wrong. Making travel reservations on your debit card--even if you pay the actual bill with a credit card--can result in major overdraft fees. Here’s why: A lot of rental-car companies and hotels put a hold on your account in the form of a refundable deposit for up to 15 days until they can reconcile all the charges (room service, minibar, etc.). And since computer systems move slowly, they don’t always realize that you paid with a different card. The result? Limited access to the funds in your checking account for up to half a month.
YOU’RE PAYING WAY TOO MUCH IN BANK FEES
Beware those $2 ATM fees. It may come as a surprise, but there are actually a lot of financial institutions (like Fidelity and Charles Schwab) that won’t charge you for “perks” like checks and out-of-network cash withdrawals. Find them. Switch to them. Or threaten to leave your current bank if they don’t waive the fees.
YOU DON’T MAKE AUTOMATIC DEPOSITS INTO SAVINGS
This is the one and only time it’s a good idea to “set it and forget it.” Determine a dollar amount you’re comfortable putting aside once or twice a month, and alert your bank to automate the deposit. You’ll be amazed at how quickly you accrue a hefty balance, which you can save for emergencies…or spend on a vacation in Paris.
YOUR NAME ISN’T ON YOUR MORTGAGE OR CAR TITLE
Of course you and your spouse co-own the house and the car. But if, for whatever reason, only one of your names is on the title deed, it could be pretty challenging to resolve your assets in a court of law should a problem (with the house or car or your relationship) come to pass. Updating the paperwork isn’t as hard as you would think: Simply contact your lender or the DMV to get the ball rolling.