Common mistakes in using credit cards: Financial security is probably in the minds of most people. Although the majority of the adults realize that they should plan for their future many people do not know-how.
There are some common mistakes people make that have serious consequences in the long run. Here we cover the four most common mistakes that happen.
4 common mistakes in using credit cards
The first mistake people make is that they fail to pay themselves first. As soon as you get your paycheck in your hand a minimum of ten percent should be put into savings. Regardless of the debt that you are financing, that ten percent savings are crucial to one day being solvent and on your way to a very healthy financial future.
The next common mistake people make is carrying a credit card balance. Credit card debt typically comes with high interest and can quickly spiral out of control. It is essential to pay off all your debt starting with the highest interest-bearing debt.
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In order to do this quickly, you must pay down more than the minimum payment every month. Put as much money as possible into eliminating that debt and you will save yourself thousands of dollars in interest payments over the years.
The third most common mistake people make is not having an emergency fund. An emergency fund is money that should be put away equivalent to at least three to six months worth of your cost of living. It is essential to be prepared for the loss of a job, medical expenses, or major repairs to either a car or your home.
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The fourth most common mistake that people make is living beyond their means. Today people are told that their every desire should be gratified immediately. Unfortunately for most people, this is not possible so they end up paying for vacations, cars, and other big-ticket items with credit. Except for a house and possibly a car, there is nothing else that should ever be bought on credit.
If you avoid making these four common mistakes, then your financial future should be very bright.