1.NOT COMPLETING AN EMERGENCY FUND~ I neglected my short term savings. Over 50% of people have less than a $1000 in their bank accounts while most have no savings at all, but nearly 90% do not have an emergency fund and don’t have a safety net. Which is putting the rest of their finances at risk- the aim should be at minimum 3 months totaling all of your household expenses, ideally 6 months for additional protection. By not doing so you will find you resort to using credit cards, or borrowing money you don’t have the ability to pay back should you lose your job, become sick, or encounter a huge bill you didn’t count on such as a transmission, roof or outrageous medical bill not covered by Insurance. PROTECT YOURSELF & SAVE
2. AVOIDING STOCKS~ Saving money is a great start, but if your not investing that money in the right places you’re spinning you’re wheels. Majority of households are investing too conservatively & are at risk down the road. I had been avoiding stocks in my portfolio and needed to change my strategy~ Yes bonds are more stable for Investing than Stocks, typically they will provide you with a much lower return overtime. Change your investing style by making it a priority to invest. First on every payday set aside a designated amount and make sure that it gets done before any bills or anything else gets paid there are many apps and platforms that are user-friendly for beginners and explain step by step how to do it, I use Acorn, Stash and Robinhood.
3. RACKING UP MORE CREDIT CARDS~ Big no-no for sure. They are nothing more than a liability not an asset & wreak havoc on your finances and bring unwanted stress, like we need anymore of that in our lives; Yet in 2018 credit card debt reached an all time high. I myself accumulated more than I am proud. If you want to come out of it, DON’T CHARGE. I fell into the trap like many people do of the more I accumulated the higher the credit score. Credit card companies want you to believe this but in fact it lowers your score with carrying a balance indefinitely and cost you an unbelievable amount of interest charges, so when the time comes that you want to borrow big amount for a mortgage, business, or an investment you will be less likely to be approved.
3. BUYING TO MUCH OF A HOUSE,LIVING BEYOND ACTUAL NEEDS~ Nearly 50 percent of American’s can’t afford the home they live in because their trying to keep up with the Jones’. While its nice to have a beautiful home everyone envies is it really worth the struggle to just go impress people that don’t help you pay for it? Or do without actual needs, wants, or prevent you from your dream vacation to seriously just show you can have the nicest house on the block? Now think long and hard before you answer or buy a home you have to struggle to pay for & maintain. It won’t be enjoyable & will likely bring you more hardship than happiness. Think about what you truly need not want. Here is something to think about~ our ancestors raised large families in one-room homes. They brought their families up productively, by no means am I suggesting that, obviously you’d survive. But the tiny house movement has become a hot commodity for Financial Freedom for many and for good reason, it provides your basic needs. As a general rule your housing cost total with taxes and insurance included should never exceed more than 30% of your family’s take-home pay if you take too much of a house you put yourself in the position of high maintenance expenses on bills and repairs. Downsize & resist the urge to live beyond your means a mansion is a want not a need.
4. NOT CONTRIBUTING TO A RETIREMENT PLAN~ We have all heard how important it is to save for retirement but we all get too busy with life and think I’m too young to think about it I’m only 25 than wake up one day and realize 20 years has gone by and you have not thought about it nor have you saved, so many are without an employer-sponsored plan and you’re out here and it’s sink-or-swim. You must invest in your Golden Year’s while your young enough to contribute to them.
I personally never missed or have been late on payments, in fact I’d sell a kidney to avoid it or starve to death. It’s just something I pride myself in. I’ve always been this way, however I also believed if you couldn’t buy cash than I didn’t need it at all. I was overwhelmed and frustrated when I opened my 1st business. I went to open the business account and wanted a start up loan while holding collateral in my hand. That’s when I was told I needed to basically have debt before I could. Otherwise did with pride that I had no debt at all, that actually hurt me and not helped me. I had to in fact borrow against my own money and start the credit building process from basically scratch not carrying any of my previous married credit with me. I stood alone with a blank canvas and I am extremely frugal so I hate to spend. But in order to build I had to acrue credit card debt and keep a steady recurring payment history. This was tough on me especially once companies started essentially throwing their cards at me in my previous mention I said I incurred credit card debt, not like most but a running total of over 3,000. Pocket change basically but I still hated seeing outstanding balance. I had no choice but to pay them over a good year to see progress although tempted many times to pay it all off at once I made that mistake on my first attempt on a secure loan thinking that by paying it off early before the year it would look better on me.. WRONG! The 11 months I paid gave me no credibility at all. It hurt me instead of helped me, and also making the fatal mistake of closing the account instead of leaving a credit line open. It’s super important to lower your balances and keep your line of credit open. Find credit cards with no minimum credit score requirements, low interest rates, and no annual fees. Apply for a secured credit card if your building from a blank canvas like I was. Apply for a credit building loan if possible. Get a cosigner. Become an authorized user on someone’s credit card. Make sure that if you are renting that they are reporting your payments. After 6 months of having a line of credit you’ll have a FICO score, but it won’t be the 850 you dream of yet. Make all your payments on time and borrow wisely you should have a score of 700 in no time. Always, always pay on time. Set up automatic drafts if you’re forgetful, pay your balance in full even if you’re just getting your nails done, know your credit score and check your report once a year, monitor your account protect yourself from fraud and keep your information updated. I use credit sesame or credit karma. Don’t get discouraged in the process by looking at the score, watching it like you do a scale when you’re trying to lose weight. Remember it takes hard work but you’ll get there if you don’t give up, and much like a diet it takes three to six months of hard work to see results. Good news is you will make it &the higher the score the better the terms of your access to credit and better rates. Scores affect your car insurance and sometimes even an impact on whether or not a company will hire you. My old-fashioned way of thinking of hiding your money under the mattress, a jar in the freezer, or keeping it out of the bank so no one knows how much you had no longer works. Credit is vital and it affects every area of your life. Now that I told you the mistakes I made I will take you in the journey of how I turned it all around. What it has done for my life, bank accounts, and portfolio & what it can do for you too..