Monday, May 16, 2016
The 5 Financial Mistakes You Do NOT Want to Make
Since tax season is basically over (except for you ACA filers), you can start to think about more “fun” financial responsibilities, like your savings and what to do with it. Or, if you’re not quite there yet, how to start saving! Whether you’re just starting out developing your financial portfolio, or you’re set and ready to retire, you’ll want to make sure you don’t make these five financial mistakes, lest you get stuck back at Square Negative One.
Borrowing From Your 401(k)
You know you shouldn’t, but it’s so tempting. But, really, you shouldn’t. Sure, you have five years to pay back your loan, but that includes interest. And that’s interest you’ll pay with after-tax dollars, only to pay taxes on those funds when retirement rolls around. Not to mention you could be short-changing your retirement account for months or years, sacrificing employer matches and missing out on investment growth, while you’re paying off your loan. When it comes to taking out a loan, look everywhere you can before going to your 401(k).
Falling for the Actually Too-Good-to-be-True Offers
Yes, this includes timeshares. In addition to the thousands you’ll pay upfront, you’re also looking at maintenance fees, travel costs, and resale prices that just aren’t worth it. And that’s the best case scenario. Worst case, it’s a scam. According to the FTC, Americans lost $765 million to scams in 2015. When it comes to your money, it’s okay to be skeptical; if something seems too good to be true, it probably is.
Only Paying the Minimum on Your Credit Card
If you’re only paying the minimum amount on your credit card each month, it could take years to pay off. Which, again, would be livable if it weren’t for that pesky interest. Consider a typical credit card scenario: a $5,000 balance on a card with a fixed rate of 12.5%. Making only minimum payments, it would take nearly ten years to pay off and cost $1,700 in interest to do so. $1.700 a lot of money to pay for paying off a loan. Imagine what you could do with that! So stop making new charges and pay more than the minimum.
Claiming Social Security Early
If you start claiming your social security at 62, the age you’re allowed to start taking benefits, your monthly check is reduced by 25% for the rest of your life. If you wait until you’re 66, the “official” retirement age, you’ll receive 100% of your benefit amount. However, if you wait until you turn 70 to claim, you’ll get an 8% boost in benefits each year for four years.
Passing Up on Advice
It takes all types to make the world go ‘round: some are good at finances, some aren’t. And that’s okay, so long as you avoid financial mistakes like these, including one of the most important: not listening to or seeking advice when you need it. There’s a reason we have experts in things like investments, retirement savings, estate planning; find one you work well with, and watch your financial decisions and know-how improve over time.
And if you need advice with your tax e-filing, that’s where we come in! You can call ExpressIRSForms Monday through Friday, 9:00 a.m. to 6:00 p.m. EDT, at (704) 684-4751. You can also send us a live chat during those hours through our site, or send us an email anytime at support@ExpressIRSForms.com!