Don't quit; keep working on your finances one step at a time.

Often we make choices either consciously or not that can harm our future. There is no magical solution that will instantly solve your problems. Here are some things to avoid that will be toxic to your future.

Don’t bother with a budget

Many people don’t make budget because they think they’re boring, unhelpful, or restraining. The purpose of budgets is to give you freedom to spend money without feeling guilty. The restraint from budgets is coming from restraining you from more debt. You don’t have the money, you can’t do something, but you’re also not going  into debt.

Only make minimal payments

The only way I can explain this in words is that you’ve basically decided to sign an agreement with the credit card to make them rich with your money while keeping your self poor. Check out Bankrate.com’s minimum payment calculator to get proof of what I’m saying.

• There different methods to working debt, some people use a snowball approach, and other break it down to snowflakes. Use what method works for you. The best system is on that you can stick with.
• Even when you’re paying your debt, have a portion of your paycheck transferred to a high interest savings account. Take 5-10% of what you pay for debt and automate deposits to build your emergency savings.
• Just keep working at paying your debt month to month and once in awhile put a big amount down to knock the debt down.
• Join No Credit Needed Network and keep track of your progress.
• Find a group of family and friends that support you and your goals.

Paying late or missing payments

So you may have needed some money to go out and eat and use you the money that was set aside for the credit card or you may have skipped it, not a big deal, right? Credit card companies make a killing when this happens, you’re even a day late, most cards will charge you $39 and it’s gets bigger when interest is calculated.

By having a poor payment record, you’re also decreasing your FICO score which determines your rates for car loans and mortgages. It’s a huge loss for you and a big gain for them.

Use your credit card as an emergency fund

One great thing about credit cards is that you can use when your car breaks down on the highway and you need a tow and there’s not enough cash in your wallet.  If you have that cash in savings, you’d immediately pay your card and you’ll have no interest to pay.

An unwise way of spending your credit card is piling every ‘emergency’ on it.  You add interest on top of all those bills and you can be crippled for a very long time. Start an emergency fund. A first goal is to save enough to cover monthly bills, then your next goal might be 2-3 months.

Your Take

What has been some financial mistakes you’ve made? How did you fix them?

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