Thursday, January 10, 2008

My Biggest Money Mistakes

Mistakes are awesome. Not at the time of course, but once you are passed the problems they have caused they are great because you can look back and see what you have learned. Here are some of my biggest mistakes along with how they helped me. Feel free to add your own too by commenting below. We can all learn a little something from other’s mistakes.

1. I paid off a credit card with my emergency fund. ALL OF IT. I think I may have been left with $50. That was dumb. Why? Well, I hadn’t been keeping up with my bills very well. I had been using some of the emergency fund almost every month to cover expenses but I hadn’t thought about that. Sure, I lost the credit card bill, but I still wasn’t making enough to cover everything.

How I fixed it- I stopped contributing to my deferred comp plan and stopped putting money into my children’s college fund. I don’t intend to continue either of those until all of my debt is paid off, so it would have happened eventually anyway.

2. I put $8000 of furniture on a store credit card. Yup… that was about the time I started this blog. I am extremely lucky that the interest rate is only 4.9% However, I am sure if I am ever late on a single payment it will go up to twenty something percent.

How I fixed it- Well, I am still paying on it. I pay a little more than the minimum, but right now I am working on my lowest balance credit card. When that is paid off, all of the money left will to toward this to pay it off sooner.

3. I raised the limits on my credit cards. I don’t remember the exact reason why, but I know I wanted to buy something and didn’t have any room left, so I asked for an increase and of course got it.

How I fixed it- I am still working on this one as well. I have stopped adding to my debt and am paying above the minimum to get this paid off.

4. I went for many months without tracking my spending. I was using credit cards and my emergency savings to make ends meet toward the end of each month.

How I fixed it- I now track my spending monthly. I have a notebook and each month I write down my bills and my budgeted for items. As I spend out of the budget categories I write down my new totals. For automatic withdrawals, I write down each of them and check them off as they clear the bank. This system works very well for me and I am glad to have finally found something that is easy and works so well.

I could probably make this list much longer but I will stop here for now. I would love to hear some of your mistakes and what you did to correct them.

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