As a homeowner, it's important to be mindful of your financial decisions. With the current economy in flux, making minor missteps with your finances can cost you big time down the road. That's why watching for potential money pitfalls that could derail your long-term wealth and financial success is important. In this blog post, we'll outline five common mistakes homeowners make when managing their money—and provide suggestions on how to avoid them.
Read on to learn more about how to optimize your finances today!
1. Not understanding your loan agreements.
It may come as a surprise, but an alarming number of people enter into life-altering contracts like student loans and mortgages without truly comprehending what they involve. Don't assume that your student loan comes at no expense - research interest rates, monthly payments post–graduation, and more to get ahead!
Mortgages are the same, and they can get complicated, but that's no excuse for ignoring the costs. Trigger rates in mortgage agreements have recently been in the news with rising interest rates and are a good example of people not fully understanding what they signed.
Fortunately, good mortgage brokers will always answer all of your questions. Have some confusion? Take the time to contact us today.
2. Not having any system to track your expenses.
High prices can make it tough to track where your money goes, but there's no excuse – with the multitude of budgeting apps and other tools around today, you have all the help you need! Whether or not cash is tight for you, staying on top of spending is essential.
3. Investing before paying off debt.
With 2021 seeing strong stock market gains coupled with incredibly low rates for borrowing money, it made sense to invest any extra cash you had rather than pay down debt. Now we're in 2022, and things look a bit different- interest rate hikes have doubled the cost of mortgages while markets are becoming increasingly unstable - making the argument for paying off debts even more compelling.
And if credit card debt is what's holding you back? Consider this your wake-up call; it pays (literally) to prioritize those payments!
4. Not saving.
As money gets tighter, we've got to make tough choices about where our disposable cash should go. But saving for retirement is like an investment in your future - and having some funds tucked away will benefit you down the road even more than it does today! Getting back on track could be difficult without savings as a safety net.
So why not get ahead of the game? Start putting aside that extra bit each month so when times do improve (and they will!), all those months of hard work won't have been wasted – instead, you'll reap the rewards from your earlier smart decisions.
5. Spending too much on other expenses, like vehicles.
Car shopping in 2022 is no easy feat if you want to stay on budget! You might want to consider hanging onto your current car, even though the new-car smell - and prices - are through the roof. After factoring in loan payments, insurance costs and gas into your take-home pay of $100k a year, there's only around $30K-$35K left for a vehicle – not exactly enough when both new and used cars have been in short supply this year, and prices skyrocketed. Although repairs aren't cheap, and you won't get that new car smell, hanging on to your current ride may be the best option financially.
No one is perfect, and we all make mistakes, but the key is to learn from those mistakes so we don't continue down a path of financial ruin. By avoiding these common financial pitfalls, you can set yourself up for a bright future full of possibilities.
If you found this information useful, be sure to share it with your friends so they can also protect their finances!