When you think of mismanaging your money and poor financial decisions you think of things like purchasing a home that you can’t afford or maxing out too many credit cards to afford a big-ticket item. Though these are major mistakes that could ruin your financial status and lead to years of stress and debt, there are a lot of little mistakes that are made that could be draining your wallet without you even noticing. The key to learning from it is to identify the problem and come up with a feasible solution. Below are a few of those mistakes you might be making.
1. ATM Fees
Have you ever checked your bank statement at the end of a month and calculated all the ATM fees? Having a debit card certainly provides a convenience. You can use the card in stores or opt to withdraw cash from your checking or savings account. However, when you go to an ATM that is out of your bank’s network, a fee is typically charged. Such fees could average $1.50 – $5 as well as additional fees from your bank. Even taking a trip to the ATM twice a week at an out of network machine could result in an average of $12 – $40 a month and $144 – $480 a year or more. For an easy solution, try using ATMs that are in network, using a cash-back feature at the checkout counter, or withdrawing more funds to reduce the number of trips to the ATM.
2. Not Considering Interest Rates
When considering products like home loans, consumers make a mistake that seems small but will cost them over the duration of their mortgage. They don’t consider the interest rates. The interest rate is what you’ll have to pay on top of the principal loan amount. A home for $250,000 with an interest rate of %10, for instance, would result in you paying an additional $25,000 for the home. However, shopping around for a better interest rate of even %5 less could save you $12,500. With thousands of mortgage companies like Eagle Home Mortgage out there to choose from, finding a better interest rate is essentially a matter of shopping around for a better offer.
3. Not Making Timely Payments
It’s not uncommon to not have the funds available when a bill becomes due, however, not paying on time could cost you in the end. For most products and services that require monthly payments, late fees are assessed when the payment is not received on time. Since most companies give a grace period, skipping out on this date could really ruin your credit and cost you more money. While $35 a month may not seem like much, it adds up to $420 a year. If you’re having difficulty keeping payment dates, discuss the option of changing the due date, you could sign up for automatic bill pay so you don’t forget about an upcoming bill, or you could put something down on your bill each pay period so the balance is at zero before or on the due date.
4. Failing to Save
The idea that you can’t take your money with you after you’re gone is very true. However, while you’re here, if you spend all your money, what will you have for later? Saving may seem like something that you can put off until you actually need money and don’t have it. Failing to save could lead to the need to borrow money which adds interest and ultimately increases how much you’re paying for a product or service. However, if you set aside even a few dollars every week, you’ll be prepared should the unexpected happen, and you’ll save a lot of money along the way.
These small mishaps may seem like nothing but a loss of a few bucks here and there. Chances are the small individual amounts don’t seem to compare to the amount of debt you’re dealing with currently. However, when you add all of these mistakes up, you’re looking at hundreds, if not thousands of dollars every year being thrown away. If you want to restore your financial health, sometimes it doesn’t require a major life change, it may just require a few small adjustments and time.