If at First You Don’t Succeed:
Everybody makes mistakes with their money. The important thing is to keep them to a minimum. The FDIC published a list of the top mistakes young people (and even many not-so-young people) make with their money, and what you can do to avoid these mistakes. For the entire list visit http://www.fdic.gov/consumers/consumer/news/cnspr05/cvrstry.html
Buying items you don’t need. Every time you have an urge to do a little “impulse buying” and you use your credit card but you don’t pay in full by the due date, you could be paying interest on that purchase for months or years to come.
Research major purchases and comparison shop before you buy. Ask yourself if you really need the item. Even better, wait a day or two, or just a few hours, to think things over rather than making a quick and costly decision you may come to regret.
Getting too deep in debt. Being able to borrow allows us to buy clothes or computers, take a vacation or purchase a home or a car. But taking on too much debt can be a problem, and each year adults of all ages find themselves struggling to pay their loans, credit cards and other bills.
Learn to be a good money manager by using the suggestions in this report. Also recognize the warning signs of a serious debt problem. These may include borrowing money to make payments on loans you already have, deliberately paying bills late, and putting off doctor visits or other important activities because you think you don’t have enough money.
If you believe you’re experiencing debt overload, take corrective measures. For example, try to pay off your highest interest-rate loans (usually your credit cards) even if you have higher balances on other loans. For new purchases, instead of using your credit card, try paying with cash, a check or a debit card.
For more guidance on how to get out of debt safely or find a reputable credit counselor, go to Federal Trade Comm. (FTC) Web site at www.ftc.gov/bcp/conline/edcams/credit/coninfo_debt.
Paying bills late or otherwise tarnishing your reputation. Companies called credit bureaus prepare credit reports and produce scores for use by lenders, employers, insurance companies, landlords and others who need to know someone’s financial reliability, based largely on each person’s track record paying bills and debts.
While one or two late payments over a long period may not seriously damage your credit, making a habit of it will count against you. Over time you could be charged a higher interest rate on your credit card or a loan that you really want and need. You could be turned down for a job or an apartment. It could cost you extra when you apply for auto insurance. Your credit record will also be damaged by a bankruptcy filing or a court order to pay money as a result of a lawsuit.
So, pay your monthly bills on time. Also, periodically review your credit reports from the nation’s three major credit bureaus — Equifax, Experian and TransUnion — to make sure their information accurately reflects the accounts you have and your payment history. For more information go to www.ftc.gov/bcp/conline/pubs/credit/freereports.
Everyone makes mistakes. The important thing is to take action. Ignoring the problem will just make your lender not want to help you. Work out a payment plan and put the blues songbook away!
The Money Mom
