On The Road To Ruin The Worst Money Mistakes You Can Make

On The Road To Ruin The Worst Money Mistakes You Can Make



On the​ Road to​ Ruin: the​ Worst Money Mistakes you​ Can Make
Bad financial management and bacteria have one thing in​ common: they flourish and mutate upon discovery .​
As soon as​ you​ realize you​ have committed bad money management,​ your error transforms itself into something else that looks too good to​ resist .​
So how do you​ prevent yourself from making the​ worst money mistakes possible in​ this lifetime? Know your enemies! Study the​ worst possible money moves you​ can make .​
This way,​ you​ can recognize bad money management when you​ see it,​ even if​ it​ sports a​ striped tie and a​ toothy smile .​
1 .​
Never buy too much house.
Know that mortgage lenders will not always give you​ advice that serve your best financial interests .​
In fact,​ many mortgage lenders might even push you​ to​ buy too much house .​
Too much house refers to​ a​ home that is​ more than what you​ need,​ or​ could reasonably pay for .​
Why would some mortgage lenders encourage you​ to​ buy too much house? the​ more expensive the​ house you​ buy,​ the​ bigger the​ mortgage lender's commission .​
It's even highly plausible your mortgage lender is​ in​ cahoots with your real estate agent .​
After all,​ a​ large loan translates to​ higher commission and more fees and interests .​
2 .​
Never use a​ home equity loan to​ pay off your credit card debt .​
At surface value,​ borrowing from mortgage lenders to​ satisfy your bank seem to​ make sense .​
After all,​ home equity rates are typically lower than your card's interest rates .​
Additionally,​ interest from your home equity loan can qualify as​ a​ tax deduction .​
However,​ the​ only way this scheme can work in​ your favor is​ if​ you​ stop racking up debt through your credit card .​
Otherwise,​ you​ would end up paying two debts - that of​ your home equity loan and your credit card .​
In the​ end,​ you​ will find you​ have only dug a​ deeper hole to​ bury yourself in​ .​
Make no mistake about it,​ though .​
Home equity lending is​ useful,​ but only as​ an​ emergency source of​ cash .​
You could set up a​ home equity line of​ credit with a​ mortgage lender .​
This can serve as​ your safety net should you​ lose your job or​ need money to​ meet hospital bills .​
Home equity lines of​ credit work much like credit cards .​
They come with variable interest rates,​ and many mortgage lenders can set one up for you​ free of​ charge and with very low annual charges .​
3 .​
Never borrow from your retirement fund to​ pay for a​ house or​ settle credit card debts.
More than 80 percent of​ the​ American workforce borrow from their retirement plan to​ pay off banks or​ mortgage lenders .​
They even think this is​ a​ smart move .​
They reason that when they repay the​ loan,​ they are in​ effect paying interest to​ themselves .​
But think about it .​
What if​ your company closes down? What if​ you​ lose your job? you​ would have to​ repay your loan immediately .​
If you​ just lost your job,​ odds are you​ won't have much dough to​ settle this debt .​
So,​ you'd get penalized and taxed on​ the​ outstanding loan balance .​
The best thing you​ could do to​ your home equity and your retirement fund is​ to​ leave them alone .​
In war as​ in​ finances,​ it's best to​ keep your friends close and your enemies even closer .​
Knowledge of​ the​ three money pitfalls will help you​ protect yourself from your greatest friend and enemy: yourself.




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