There are good money decisions such as comparing buy to let mortgages and bad money decisions such as investing your life savings in Arizona oceanfront property. In today’s rough economy, it’s imperative to save money for a rainy day, but people still make these money losing errors time and time again.
Invest in a New Car
That new car on the lot looks snazzy, no doubt. It’s got all the latest bells and whistles and you’ll be the first one to be permanently behind the wheel. The car drops a significant portion of its value the second you drive it off the lot. If something happens and you need to sell it, you’re not going to get nearly enough to pay back the loan balance.
Instead, purchase a car that is a year old or so and make sure it still has plenty of warranty left. The cost will be much less and you’ll get more of its value if you need to sell it.
Not Doing Your Research
When a friend or someone on the television tells you that a certain company is a great investment, many people will jump on the bandwagon, especially if it offers a fast and big payoff. Before you invest your money in anything, make sure you do your research first. Never take someone’s word on it and ask for facts and figures. You may find out the company just lost a major account, is under federal investigation or is actually a scam.
Extravagance Vs. Savings
When you find yourself with a little extra at the end of the month, it’s easy to go out and buy something that you’ve been wanting. You’ll have some immediate gratification from that video game or movie you bought but a week later when you need gas money, or the washing machine breaks down, that video game is going to be useless. Instead, put money into a savings account and keep it for a rainy day. An unexpected expense can be crippling with no money in the bank.
Taking Out Unnecessary Loans
Loans mean interest and interest means more money. Do you really need to take out that two-year financing on your living room set, or could you have simply waited another six months to buy it outright. Instead of taking out loans, set up a savings schedule so you can pay in full instead of getting financing for big ticket items.
Paying Too Much on Taxes
You may think that by doing the taxes yourself that you are actually saving money in the long run. In reality, you could be missing out on tips and tricks that the professionals know that you don’t. You could end up paying $2,000 in taxes, but if you would have simply had an accountant do your taxes, you could have ended up with a refund. This is especially important for people who require tax preparation outside the norm such as contract workers and business owners.