Fixing The Financial Mistakes Of Your 20s
Are you loaded down with piles of debt thanks to the decisions you made years ago?
Lucky for you, there’s hope!
Here’s how to fix the five most common mistakes people make during their 20s:
The mistake: Racking up credit card debtWhen life’s pleasures are just a swipe away, the world is a wonderful place! Until you need to pay the bill, that is.
The fix: Stop using your credit cardsCreate a budget to help you monitor your discretionary spending and stick to debit or cash only.
The mistake: Ignoring your credit scoreAggressive credit card usage has probably hurt your credit score, making a large loan difficult to obtain. A poor score will also burden you with an unfavorable interest rate for such loans.
The fix: Pay down your credit card debtWork on actually paying down your credit card debt instead of only making the minimum monthly payments. Choose one bill to pay down first and max out your payments on this card until it’s paid off. Then move on to the next bill until you’ve paid off all your debt.
The mistake: Skipping student loan billsWhen you’re facing a huge debt with an entry-level salary, it’s tempting to just ignore it and hope it goes away.
The fix: Work it into your budgetCall your lender to work out a more feasible payment plan and check if you qualify for a student loan forgiveness program. It’s equally important to make your student loan payments a part of your debt payment plan so you never miss a payment again.
The mistake: Neglecting your retirementNeglecting your retirement means missing out on years of compound-interest gains.
The fix: Think of it as a fixed expenseConsider your retirement savings a necessary expense that must be worked into your budget, just like your rent or utilities. Work with whatever you can afford and max out your contributions to an IRA or your company’s 401(k) plan.
The mistake: Not having an emergency fundScrambling for funds to pay for an expensive emergency can be a nightmare.
The fix: Start smallSet aside any amount of money you can for monthly contributions to an emergency fund. Let your fund snowball until it’s worth something big.