5 Life Altering Money Mistakes Financially Independent Women Don’t Make
Last Updated on 08/20/2022 by Nicky
There is so much financial advice online, on tv, in magazines, that it can be a little overwhelming knowing what to do and what not to do.
Where do you start if you are a financial newbie, right? It’s confusing.
Here’s my advice: Avoid these 5 money mistakes and you are well on your way to becoming a financially independent woman.
These are common mistakes that lots of people make, including me (in the past). So lest you think, there is no hope, I assure you there is.
5 Money Mistakes Financially Independent Women Don’t Make
Mistake #1: Using Your Credit Card For No Reason
Oh, I remember the first day I applied for a credit card. I was waiting in line at the university bookstore. S
o young and so financially dumb. And can you believe it?! I actually got approved! And I also received a free t-shirt! (end sarcasm)
Once I got my credit card, I was just using it all the time…for NO reason.
Just going to Taco Bell broke as I wanted to be, paying for Nachos Bell Grande with a Visa card.
But but but, I paid my $30 minimum payment every month so I was good.
SMH.
If you want to avoid paying for your $6.56 fast food meal for the next 6 months then don’t use a credit card.
Use cash for frivolous things like that. In fact, if you can’t really handle it, don’t use a credit card at all.
I used to be completely anti credit card after I got out of debt but now I use it strategically, to earn travel points.
No, Dave Ramsey wouldn’t approve but it works for me for two reasons. Which brings me to my next point.
Mistake #2: Not paying off your credit card bill every month
Remember when I said I had two reasons why I feel comfortable using credit cards back in point #1?
It’s because I pay off my bill every month automatically and I hate debt…which is why I pay off my bill every month automatically.
If you’re not paying off your bill every month then don’t get a credit card. Period.
Credit card debt is the fastest way to jack up your finances. It’s so easy to rack up debt and so hard to pay it off if you let it keep accumulating.
Those fast-food meals that I would “pay for” with my credit card? I would pay for them for years to come because I only paid the minimum. Just paying the minimum balance ensures you’ll be in debt for many years to come.
Even a $1,000 balance can take you over 5 years or more to pay off if you only pay the minimum. That’s unacceptable in my world.
The interest rates are sky high and they play a big part in your not reaching your debt-free goals.
And if you miss a payment, you have to pay a late fee on top of your real payment.
Not only that but your interest rate that was probably already ridiculously high at 18% might climb to 30%.
Again, don’t get a credit card without a plan. Don’t get a credit card if you’re broke. Don’t get a credit card if you can’t pay it off every month. They are not your friend.
Mistake #3: Buying more house than you can afford.
Keeping up with the Joneses is a great way to stay in debt for life. Exhibit B: mortgages.
I think buying a home with cash is perhaps the best way to own your own home. However, that may seem out of reach for many people so a mortage is completely fine…within reason.
But when people start buying houses with no money down and using ARM (adjustable rate mortgages- meaning the interest rate can change- see definition below ) can be a path to financial ruin.
“A variable-rate mortgage, adjustable-rate mortgage (ARM), or tracker mortgage is a mortgage loan with the interest rate on the note periodically adjusted based on an index which reflects the cost to the lender of borrowing on the credit markets. The loan may be offered at the lender’s standard variable rate/base rate.”
Please please please only use a fixed-rate mortgage. Don’t borrow all of the money that the bank says you can borrow.
Go below that..way below if possible. If they approve you for $300,000 and you only feel comfortable borrowing $200,000 then listen to your instincts.
Don’t let anyone pressure you to borrow more than you can afford.
Mistake #4: Not being the boss of your money
You need to tell your money what to do.
Otherwise, managing your money will be like herding feral cats…it’ll be going in every direction and at the end of the month, you won’t have a clue how it went so fast.
Have a plan for your money before you get it.
Have money automatically going into a bank account with no debit card attached to it (so you can’t spend it easily).
Have money automatically going into a retirement account before your paycheck is even deposited into your account.
Otherwise, you’ll end up living paycheck to paycheck.
You’ll have no savings. You’ll have no retirement plan. You’ll have no emergency fund.
Control your money or it will control you.
Look at each dollar like they are soldiers with you being their general. You’re the boss.
You tell your money where to go so that you and your family won’t struggle financially.
Mistake #5: Not saving for retirement.
Lots of American’s have no retirement savings plan.
Ya’ll do not be one of those people (in any country).
Don’t rely on Social Security.
It may not be there.
The goal is to eventually save 15% or more of your income into a retirement plan like a 403B, 401k, IRA, etc.
Get educated on these plans and then open several of them and start saving like yesterday.
You don’t want o look up and be 60 years old with no retirement. It’s a scary place to be.
Here’s a good place to start to figure out which type is best for you: Retirement Accounts You Should Consider
What will your next step be?
I sincerely want you to take action so you can move toward financial freedom.
Be sure to download my free Financial Milestone checklist so you can track your financial goals progress.
You can use this checklist to track your financial goals like when you’re out of debt, when you’ve created a retirement plan, etc.
And you can also write in your own financial goals that you want to accomplish in the future.
Don’t keep saying I’ll do something tomorrow. Do something today to help secure your financial future. Take action…you won’t regret it.
Okay, I’ll see ya’ll in the next post :).
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