Ten Bad Money Habits

debt cartoon

1: Misusing balance transfers

If you can’t refrain from charging, balance transfers won’t get you out of debt. If you’re really in the hole, consider getting a part-time job and dedicating your earnings to your debt load. If that’s not possible, go back to your budget and cut back on unnecessary expenses such as restaurant outings and cell phone extras. Put the money you save toward paying off your balances. Pay for any new purchases with cash or a debit card.

2: Not checking credit reports because you can’t change them anyway.

If you have credit cards, pull your credit report at least once a year and check it for errors. You can request one free copy from each of the big three credit reporting bureaus, Experian, TransUnion and Equifax, every year.

3: Failing to alert creditors about a financial hardship

“The best time to negotiate is before the problem spirals downhill,” says Cunningham.* Call the credit card company and explain the problem you’re about to have.

4: Thinking of ‘budget’ as a dirty word

Find out what’s draining your finances, keep a track of where your money goes for a month. Use a spreadsheet, financial software or a pen and paper to categorize your expenses. Cut back as necessary without cutting out expenses important to you.

5: Using retail store credit cards to make use of discounts

Chances are, that card carries a high interest rate you’ll be forced to deal with if you don’t pay off your balance each month. Limit the total number of credit cards you have to just two, if you can: one you can pay off each month and one with a low interest rate for those large purchases you’ll pay back over time.

6: Procrastinating on creating an emergency fund

Maintain an emergency fund of at least three to six months’ worth of living expenses, and keep your insurance policies up to date. Work toward that goal by socking away 10% of your take-home pay each month in a liquid savings account

7: Paying bills in no particular order

Pay living expenses first: House or Rent, utilities, car payments, secured loans, unsecured loans and credit cards.

8: Charging purchases instead of paying in cash or with a debit card

Make a habit of paying for purchases under $50 with cash, debit or check.

9: Making credit payments late

On a calendar, mark upcoming paydays and payments

10: Making the minimum payment only

If you can afford to pay more or in full, go ahead and pay as much of the balance as you can. You never know when you’re going to have a tough month. Pay in full every month and you can avoid interest charges altogether.

*Gail Cunningham, vice president of business relations at Consumer Credit Counseling Service of Greater Dallas

**For more information on this blog visit: MSN Money

*Money Mondays*

“Communication works for those who work at it.” – John Powell quotes