If you’re not careful with your financial decisions, you could quickly find yourself in debt and struggling to stay afloat. Managing the bills, paying the mortgage, and staying on top of your finances are always going to be tedious and frustrating chores. However, if you make the right financial decisions then you will always have enough money on hand to handle these expenses. Below, you will find financial decisions that you want stay far away from, so that you can keep your financial stability intact.
While short-term loans have become particularly popular in recent years, they are a financial decision that you want to stay far away from. Payday loans come with severely high interest rates and they have very short-term repayment periods. This means that you will be expected to pay off the payday loan within 2 to 4 weeks upon receiving the cash. This is a very short-term timespan and it’s often difficult for borrowers to manage.
While a car lease can be much more affordable than actually purchasing a car through financing, they are generally not recommended. Car leases are short-term solutions to getting a reliable car, but you will often have to purchase a car or renew your lease after your current lease has expired. You do not own the vehicle and when you barely have enough money to afford the car lease payments, it’s a negligent financial decision.
Unmonitored credit card usage
Using credit cards responsibly is a great way to build your credit score and improve your financial standing with the banks. However, unmonitored credit card usage or over-usage of your credit cards could build a considerable amount of debt and leave your finances in turmoil. You need to be very careful with how you use your credit cards and how much money you apply toward them at the end of the month. Paying the minimum payment is a negligent decision as credit cards should always be paid off in full if possible.
Committing to a substantial mortgage
When you go to the bank and you are given a preapproval on a mortgage, you should never purchase a home that maxes out that mortgage amount. Banks are often far too generous with the amount of money that they approve. If you want to live in easy-going life, you should spend far less than what the bank will approve you for on a mortgage. This will make your monthly payments more affordable and you will have more money left over in your budget to afford other expenses.
There are lots of ways that you can invest your money, but some of them are more risky than others. For instance, Forex or currency trading can be wildly profitable, but it has a very steep learning curve. Some people tend to dive head into new things that they are excited about and this often leads to debt and risky financial decisions. Try to control your spending and do not jump into risky investments without weighing the options that are available to you.