Biggest Financial Mistakes

Proverbs 1:5 says, Let the wise hear and increase in learning, and the one who understands obtain guidance. Today we’ll tell you about some of the biggest financial mistakes so you can learn from them. So a recent survey asked folks about their biggest financial faux pas. HOME BUYING MISTAKES Interestingly, first on the list was buying or not buying a house. Obviously, it’s a huge financial decision and it can go wrong either way. Some in the group reported they bought too much house and were having difficulty making mortgage payments. Others said the home they bought required more work than they bargained for. Still more said a big mistake was not putting down 20% to avoid paying private mortgage insurance. But some reported that it was a mistake not to buy a house a few years ago when home values were lower, because now, they can’t afford to buy one. Well, to those folks we say, keep saving diligently. Home values are showing signs of moderating, and eventually, you’ll catch up to the market. MISUSING STUDENT LOANS The next mistake people cited was student loans specifically, using money from those loans for what they now consider frivolous spending (eating out at nice restaurants, buying upscale clothes, etc). Others said it was a mistake to borrow for a degree that didn’t provide marketable skills that employers want, so now they’re unable to find a job with a salary high enough to repay their loans. The moral here is that you always want to borrow as little as possible, use the funds only for education, and choose a major that will provide a reasonable income. CO-SIGNING Now, talking about loans in general, a lot of folks said it was a mistake to be on either side of one. Specifically, some said that co-signing a loan for someone else was a big mistake. And the Bible certainly agrees. Proverbs 22 warns, Be not one of those who give pledges, who put up security for debts. If you have nothing with which to pay, why should your bed be taken from under you? And some even said it was a mistake to borrow from a family member or friend presumably because it damaged the relationship. FORGET ABOUT THE JONESES The next mistake involves keeping up with the Joneses and spending way too much on a wedding to impress people that didn’t have to pay for it. One bride even said she wished she’d gone potluck and wore a simple dress instead of shelling out thousands on an extravagant meal and fancy wedding gown. UNPLANNED PURCHASES Impulse buying also made the list of mistakes people cited. They regretted buying a lot of stuff that made them feel good for a moment but then ended up in the garage or basement, gathering dust. If only they’d read Luke 12:15, where Jesus says, Take care, and be on your guard against all covetousness, for one's life does not consist in the abundance of his possessions. The impulse buyers said that instead, they should have put that money in a retirement account, which was actually next on the list. NOT INVESTING ENOUGH FOR RETIREMENT Many respondents said it was a mistake not contributing more to their retirement accounts so their holdings could grow more over the years from the benefit of compound earnings. Specifically, they said it was a mistake to not take advantage of employer matching funds in their 401k. We always advise you to contribute at least enough to max out any employer contributions because it’s free money. You don’t want to turn that down. CREDIT CARDS Now, what list of financial mistakes would be complete without mentioning credit cards? And of course, a lot of respondents said it was a mistake to go into debt the first time for things they couldn’t afford to buy with cash. But some even admitted they didn’t learn from that mistake. When they got a windfall of some type and paid off their credit card debt, they kept overspending and found themselves in debt all over again. And that’s why we tell you that the only way to avoid going into debt is by living on a budget and having an emergency fund for unplanned expenses. Otherwise, you’ll just reach for a credit card to solve a problem or satisfy a wish. On today’s program, Rob also answers listener questions: ● Is now not a bad time to build a home with a potential economic downturn looming? ● Is it possible to buy more than $10,000 in I-bonds this year? ● Why might you be denied for a loan despite good credit? Remember, you can call in to ask your questions most days at (800) 525-7000 or email them to [email protected]. Also, visit our website at MoneyWise.org where you can connect with a MoneyWise Coach, join the MoneyWise Community, and even download the free MoneyWise app. To support this ministry financially, visit: https://www.oneplace.com/donate/1085/29