Finance Managers Wish People Would Stop Doing The Following
- Interest-Free Financing
- Spending Too Much on a Home
- Reverse Mortgages
- Quitting a Job Without a Plan
- Borrowing Too Much
Working with a finance manager is great way to get your finances under control and to get out from under the debt that you carry. Many people do not make an appointment with a manager until they already made a number of mistakes that will impact their credit histories for years to come. There are a few common and simple mistakes that these managers wish people would stop making.
One mistake that some make is with interest-free financing. You've probably seen ads on television or heard ads on the radio that talk about how you can buy something with no money down and pay no interest for the first three months or 90 days. Companies that offer interest-free financing let you buy cars, appliances, electronics and even cell phones. What you may not realize is that if you do not pay off that loan within the time frame, the company charges all the interest from those 90 days on your loan, which will leave you paying more than you wanted.
Spending Too Much on a Home
Spending too much money on a home, whether it's renting an apartment or buying a home, is another common mistake. According to Jeff Reeves of USA Today, you should pay no more than 1/3 of your total take home pay on your mortgage or rent and all other related expenses. If you bring home $1,500 after taxes, you should look for a place that costs no more than $500 a month. The more you spend on your home, the less you have for your bills and expenses.
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Reverse mortgages are popular among the elderly. Companies pay you money based on the equity in your home. Those companies send you a check each month that you can use for your expenses. When you move out of your home or pass away, the money you received comes due in the form of a lump sum payment. Most companies will take ownership of your home and sell it to cover the money you owe. While reverse mortgages make sense on paper, if your parents take one out, you may lose your claim to their home later.
Quitting a Job Without a Plan
Even those who love their jobs sometimes dream of quitting and doing something completely different like travel the world or write the next great novel. Many people simply dream about quitting though and keep their jobs because they have a lot of expenses. If you go to your finance manager and ask about quitting your job, the first thing the manager will ask is about the plan that you have in mind. Unless you have a large savings account or a guaranteed way to cover the loss of income, never quit your job without a good plan.
Borrowing Too Much
The biggest mistake that many people make is that they borrow too much money. When you apply for a home or car loan, the bank will pull your credit history, look at your take home pay and examine the monthly bills you have to determine how much you can afford to borrow. Some banks will let you borrow more than you can actually afford though. You should think about your bills and how much money you spend on other things to decide how much extra you can afford to spend on a home or vehicle.
No matter how financially comfortable you feel, you might still make a few mistakes over the course of your life. When you work with a finance manager, you can learn how to avoid the same mistakes they saw others make in the past.