Seven Top Money Mistakes

And How to Avoid Them

Money mistakes can cost you thousands of dollars and months or even years in lost time. Here are the seven most common money mistakes to look out for with their very simple solutions.

1. Racking Up Debt

As they say in the financial industry, "If you play with snakes, sooner or later you are going to get bitten. Credit cards can help you to establish a good credit rating, but they can also hurt you in the long run. Use them responsibly: only use them if you can afford to pay cash for the item, and then pay them off completely at the end of each month. The key is to treat the transactions in your check register just like you would a debit or check so that you don't go ever your cash limit.

2. Not Being Adequately Insured

Accidents happen all the time. Don't be caught without sufficient insurance, or the fallout could effect you the rest of your life. Auto, homeowners (or renters), health and disability insurance, as well as life insurance are an important part of financial future planning. We had a pot of beans burn on the stove for several hours, causing extensive smoke damage to our brand new home. It cost tens of thousands of dollars to repair, but luckily we were covered.

3. Putting off Saving

The sooner you start the better. Make sure you pay off all of your debts, and then get going on a regular savings and investment plan with 10% of your income.

4. Opting Out of Your Company's 401K Matching Plan

If your employee benefits include a matching plan for the company's 401K do whatever you can to maximize it. There is no sense turning away all of those free extra contributions to your nest egg.

5. Not Paying Yourself First

The amount of money you invest every month should never be compromised in the name of instant gratification. You will never miss it if you follow our money management plan .

6. Agreeing to Co-sign a Loan

This money mistake should be a no-brainer. There is a good reason that someone has to ask you to be a co-signer on a loan: they have less-than-perfect credit. Why would you let them bring you down with them? Just say "no."

7. Buying New When Used is Just as Good

If you cannot put 20% down on the car of your dreams, you will likely not be able to keep up with the rate depreciation. As a result, your car will quickly be worth less than what you woe on it. Buy a used car instead so that the majority of the depreciation is already behind you. Then, drive it for along time. The '96 Honda Odyssey we bought in '99 lasted for 8 years before we traded it in for a '05 model in excellent condition.

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