Don’t Throw Good Money After Bad

By Barry Waxller | January 28, 2010 | Popularity: unranked (?)

We all make ghastly mistakes with our money. This is true whether you make a ton of it or just enough to get buy. If you looked back at what you did with your money over the last five years, you would groan. Let’s make the next five better.

Getting the most out of your money takes discipline. A huge, but subtle, area where we all lose the value of our money is through failing to act. We fail to start saving for things such as a home now, which puts off the act we ultimately want.

We are a debtor nation and that is not a good thing. If you ever hope to get out of debt, you must stop spending more than you bring in. It can be tough at first, but it will ultimately pay off. Turn this one trick and your finances will improve.

How can a vast majority of us be spending more than we earn? Credit, of course. Credit is the promise of money, but it comes with a sharp catch. Borrowing it is expensive. Get rid of your credit debt as soon as possible.

One of the biggest mistakes we make with our money has to do with impulse purchases. Ask yourself if you really need that new item. If you didn’t set out from your home with the intent of buying it, you probably don’t. Don’t blow your money!

If you take nothing else from this article, take the following. Cut up your credit cards. Credit cards offer nothing good for your financial health. They are the route to impulse purchases and have terrible interest rates. Burn them!

I received a statement today from the Social Security Administration. After working for upwards of 30 years, I was notified I will receive a whopping $1,100 a month when I retire. Oh, joy. Start saving for your retirement yesterday!

Avoid the ravings of the latest financial gurus. Most of the gurus are only good at selling themselves. A year ago, they all said the real estate bubble would never burst. It did. Now they are saying it will be a long time before it bounces back. Wrong again!

The number one way to be unhappy is to live according to what others think you should do. Don’t. Live for yourself and plan your finances accordingly. If you want to travel, save to do it instead of buying a new car.

Save up a year of expenses. Figure out how much money you would need to survive for a year. Now go about saving that amount up. Once you have it in hand, you have created a nice financial buffer. Lose your job? You have a year to find another one!

Ultimately, the biggest way to avoid making mistakes with money is to use your common sense. Cut your spending and credit cards up. Invest in solid investments. Enjoy your life with a minimum of stress.

Barry Waxler is a financial advisor with UFCAmerica.com.

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