ECRA Header

10 Mistakes In Money Management

Each one of us tries very hard to invest well, to save for rainy and post-retirement days. Some people do well, and some people make some very costly mistakes. Here are a few mistakes that you should avoid:

1. Putting all your eggs in one basket.

Do not invest everything you have in company stock. If by any chance the company fails, you could be wiped out. Put a ceiling on such investments, of about 10% - 15% and look into some foreign stocks. The key here is diversity!

2. 401(k) funds are for retirement. Keep it that way!

Many people tend to wipe out these saving when they change jobs. Fight the temptation to cash in your 401(k) funds. Just to give you an idea, $1,000, at a 7% return and matching funds from your company, will give you a whooping $153,110 at the end of 30 years.

3. Using 401(k) is not for college expenses.

Do not use your 401(k) for paying for your children’s college education. Take out a loan for that. Your children can take loans later; you cannot - after retirement.

4. Tax-free bonds – NOT such a great idea!

Don't invest in tax-free bonds and variable annuities for your IRA. Instead, use the allocated funds for purchasing monthly mutual funds shares. In this way, you'll end up buying more when the prices are down, and less when the prices are up on the shares.

5. ARM Vs. Fixed rate mortgage.

Contrary to common belief, an adjustable rate mortgage is not a good idea over a long period. A fixed rate is best – ideally a 30 year fixed rate – and forget about worrying about raising rates.

6. More than two credit cards – a recipe for disaster!

Be wise; do not apply for more than 2 credit cards, lest you will be tempted to run up too much in debt.

7. Why insure kids? Insuring your kids is a waste of money.

Rather channel the money into a disability insurance that will help you in time of need. Statistics show that there are about 30% chances that you might have a disabling accident at work. These are serious odds that need to be taken seriously! Choose a policy – if you are not already insured at work – that pays you about 75% of your income until you are 65.

8. Tax refunds can help you with cash.

Try to adjust as much as can your withholding; this will be comparable to an interest-free loan. Check this out with the irs.gov calculator. Also, always sell poor performing stock.

9. Pay attention to medical bills.

Whenever you have to undergo medical treatment, contact your insurer and find out what is the "usual and customary" amount for that particular procedure. Armed with this knowledge, request that your doctor match it. You'll be surprised – pleasantly – to find that most doctors will agree!

10. Stop buying premium gas.

Contrary to common belief, the "premium" does nothing more than burn a hole in your pocket!

15 Superb Money Saving Tips

You've heard the old adage "Money saved is money earned" To me, no amount of money-saving tips are enough because this is indeed the easiest way to increase your purchasing power.

1. Cut down on energy usage in your home.

There are many ways to improve the energy savings in your home, and the more you optimize, the more you'll save. Pay attention to the windows, quality of air-conditioner, ventilation of your home, energy drainers such as faulty attics and so on. It pays to have a specialist do your home – even though it costs, you will save plenty in the end.

2. Learn to live green.

Adapt your style of living to include as many green objectives as you can. Use solar panels for heat and even electricity, switch to low-consumption lighting, water harvesting for water, and the like. Research and find ways to live green. Our Planet is dying; besides saving money, you'll have the satisfaction of living right and doing your bit for the environment.

3. Buy only generic drugs.

These are much cheaper than the branded drugs, yet as per the FDA rules they offer the same purity and quality as their more expensive counterparts. Your saving can be huge from this only.

4. Downsize. Cut everything out that is really not important.

Take out the landline if every member of your family has a cell phone. Remove the premier cable line and use the regular one; at best you will be following 3-7 channels throughout the year. Don’t buy movies, rent them. Cut one restaurant meal per week/ per month; it adds up in the end. Cut down on cigarettes and alcohol; both are poison and the irony is you are paying for it, too.

5. Be careful about coffee.

Yes, most people pay a small fortune for coffee. Yes, it's lovely, I don't deny that. But that the money you save per cup makes an even “lovelier” sum in the end.

6. Use a free-checking bank account.

Identify banks that offer free checking. You'll save a lot on service charges. The website Bankrate.com can be very helpful here.

7. When taking cash out from ATMs, ensure as much as possible that you use your own bank’s ATM.

When you use others, you pay an extra charge of about $1.5 - $3, which can snowball into a considerable sum

8. Grocery coupons are good. Do not ignore grocery coupons.

These can provide you with a substantial discount and contribute to your monthly savings.

9. Buy in bulk.

Make a budget of what you want and if you can, once every three months buy consumables that can be easily stored. You'll be stunned by how much you can save when you buy in bulk from a wholesaler.

10. Take care of the cents; dollars will take care of themselves.

What this adage says is so true! Watch out for the small drip-like expenses, because this is what bleeds you of your money. If you pay attention to the seemingly “small and insignificant” expenses you'll have conquered financial management principles.

Resources

The Credit Repair Organizations Act
The Fair Debt Collection Practices Act (FDCPA)
Fair Credit Reporting Act (FCRA)
Consumer Credit Protection Act
The Fair Credit Billing Act
The Equal Credit Opportunity Act (ECOA)

 

Useful links
ECRAonline.org/Blog
Experian
Equifax
TransUnion
Get Your Credit Report and Score
Credit Score "Compass"
Credit Monitoring Service
Debt Consultation
Auto - free quote
Personal - from $100 - $1,500
New Millennium Bank Secured Platinum Visa
New Millennium Gold Visa/MC
Orchard Bank Secured MasterCard
Compare Over 40+ Cards
Compare Over 20+ "Problem Credit" Cards
Help With Your Tax Problems
Legal Documents
Quote of the Day

"Scientists were rated as great heretics by the church,
but they were truly religious men because of their
faith in the orderliness of the universe."

Albert Einstein

2010 ECRAOnline.org. All rights reserved.
The Ethical Credit Repair Alliance
270 Northland Blvd
Suite 210
Cincinnati, Ohio 45246
513 771-1726
Fax: 815 717-7579
Email: support@ecraonline.org
ECRA Logo