10 Ways to Go Broke (Part 2 of 2)
Last week I talked about five ways to go broke. Here are five more!
NOT HAVING INSURANCE
In the event of an emergency or major life change, we all need insurance. Home, life, health, and disability insurance can protect you and your family. Even if your employer doesn’t offer health insurance, you have low-cost options available and should at least have hospital coverage. If you're injured and unable to work, you need to have disability insurance. Life insurance is a must. Make sure your family will be taken care of if you die. If you have a home, seriously consider insurance in case of a natural disaster. Being prepared is key, as we don’t plan for these things to happen. When they do, not having insurance may cause more pain and loss.
YOUR CREDIT SCORE IS DECLINING
One of the main considerations in determining your financial health is your credit score. Two main factors determine your credit score, your payment history and the amount of credit you're using. Ideally, you don’t want to use over 30% of your available credit. If your score is falling, you may be using too much credit and/or missing payments. If your cards are maxed out, you will not have money available when you really need it. Try to cut your expenses or talk to your credit card agency to work out a payment plan.
NOT SAVING FOR RETIREMENT
When you’re in your 20’s and 30’s it can feel like retirement is a long way off and you will have plenty of time to save for your golden years. However, the sooner you start saving the better. The longer you wait, the harder it will be to put enough away to sustain you at the end of your career. Consistency in savings will be key in building your nest egg.
BUYING TOO MUCH HOUSE
Bigger isn’t always better. If you don't need more space for a big family or your home office, stick with something smaller. When you have a bigger home than you need, you’ll be paying more for your mortgage, taxes, insurance, utilities and maintenance. These higher costs may force you to rely on credit for your vacations, raising your children, college tuition, and not being able to save for retirement. Don’t let your big house drive you to the poor house.
AVOIDING OR IGNORING YOUR CURRENT SITUATION
You are headed for financial crisis if you avoid opening your bank statements, credit card statements and other bills. You know you need to do it, but can be afraid to face it. It’s very important to stop this behavior as soon as possible, and determine how bad it really is. You will need to forgive yourself and take responsibility by making the necessary changes. It will take dedication and action, but it can be done.
In conclusion, you need to take your money situation seriously. If you can relate to any of these issues, it’s not too late to resolve the situation. If you can’t do it on your own, seek out a professional who can help you.