Thursday, November 20, 2014, AM | 1 Comment
Bad habits can lead to bad things. Some of the effects can be mild, such as a messy bedroom or a wasted weekend. However, one thing can lead to a next and effects can compound. On the extreme end, it’s possible for bad habits to lead to bankruptcy.
Here are 4 bad habits you need to make sure you don’t develop.
Credit card abuse
Many people use credit cards appropriately. Often, they use it just for the rewards and pay off the balance every month. On the other hand, the card can enable one to live beyond one’s means.
What’s awful about credit cards is that the interest rates are very high (often in the double digits) and companies make it very easy to pay the minimum every month.
Since it’s a quick easy swipe, it’s very easy to lose track of how much you are spending. Some people find it beneficial to always pay with cash.
Making big financial commitments
Your housing and transportation can be large fixed costs. If you’re renting a luxury apartment and sports car, be sure you can afford it.
It might not leave you much wiggle room. And remember, it’s hard to get out of these agreements.
Most housing requires a year lease. And while a dealer might take a car, you’ll have to pay a hefty penalty.
More and more people are living paycheck to paycheck everyday. This makes it hard to acquire an emergency fund. So the next costly big event (such as medical bills or losing a job), is enough to put them into bankruptcy according to Exelby & Partners Ltd., a company that helps with bankruptcy in Emonton.
Many experts recommend having a six month emergency fund. You can invest this in savings account so you get interest.
Not only will this allow you to financially survive a bad event but it will also allow you to sleep soundly at night.
Not having health insurance
This is huge. When you’re young, you think you’ll be healthy forever. And then something unexpected happens.
Healthcare is extremely expensive in the United States. With the costs of drug research skyrocketing, many medicines are as well.
Often many procedures cost 5 or even 6 figures. An adequate healthcare plan costs several hundred dollars a month.
Although that’s not cheap, it certainly beats having to pony up for a huge bill.