Common Money Mistakes That Can Drain Your Account
Do you have problems keeping your money for precisely long? If yes, then know that you are not alone. Some of those who earn big, six-figure salaries often find themselves broken at the end of the month. That means they aren’t spending their money in the right way. Here are some common money mistakes many people make.
Use of Credit Cards
Studies have revealed that those who use credit cards spend between 12% and 18% more than those who use cash. It was also discovered that those who purchase by credit cards and don’t pay off their balances every month, always spend 50% more on their total purchases i.e. interest plus additional fees. Therefore, if you can get used to shopping with cash, you can save most of your money.
Making Very Little Credit Card Payments
Always pay off your credit card debts immediately. Card debts have higher annual interest rates that keep piling if not settled. For instance, if you have a credit card debt of $10,000, and you are only making minimum payments, it will take more than 35 years for you to settle the debt completely. After the debt is cleared, you will discover that you’ve given out more than $19,000. To avoid putting yourself in such mistakes, pay all your credit card debts at the right time.
Buying Extremely Old Vehicles
Although the cost of buying a new car is more compared to an old one, a new car will save most of your money in the long run. A used car needs a lot of repair and maintenances that will cost a lot of your money. If circumstances compel you into purchasing a used car, then look for quality.
Carrying Heavy Debts
It’s a common thing for some people to always be in debt. However, much they try to pay off, they always find themselves in a new debt. In addition, some take huge loans or a second mortgage in order to consolidate their debts. If you are keen enough, you will discover that these strategies appear to be good, yet full of challenges. Taking another debt to settle a debt is only procrastination. Besides, nothing excruciates like returning the borrowed amount with hefty extra money – interests.
Living In an Expensive Home
Some people mistakenly think that paying monthly house rent is a waste of money. On the contrary, renting a house helps you to save a lot. Having been able to pay a $1,000 rent payment per month doesn’t mean you can afford a mortgage of the same monthly payment. The rule of the thumb states clearly that your own house should cost an additional 40% of your monthly rental payment. It means- if your house rent is $1,000 per month, then your mortgage should be $1,400.
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