Ghosts, goblins, witches and mummies aren’t the only things to be scared of in October! Here are 5 scary things you should NOT be doing with your money!
Taking On Scary Debt
Let’s be honest, all debt is scary!
If you’ve been following my blog, then you know that my husband and I recently finished paying off $87,000 of student loan debt this month! And after accomplishing the task, I must say that debt is scary. Debt payments can be large. And if you lost a job, how would you pay for it?
Don’t let debt be a scary monster that consumes your life. If you have debt, get it paid off as soon as possible. If you don’t have debt, then stay away!
Keeping Your Long-Term Savings in the Bank
Obviously, it’s important to keep SOME savings in the bank in case of an emergency: needing a new roof or tires on the car. But don’t let all your money sit in the bank making pennies of interest each month.
Be sure that you are saving for retirement with good mutual funds. Either through an employer-match 401k or an individual Roth or IRA, make sure you’re saving money for your future.
Sure, the future can be scary. But what’s really scary is not saving money for your retirement future. My husband and I are 23 and 26, and we’ve already been saving for retirement through our employer-matched 401k options.
And with the market doing so well, we’ve received almost a 17% return since we started. While this isn’t a guarantee for everyone investing at all periods of time, the market right now is doing much better than that .01% you’re making in the bank.
Not Budgeting Your Money
If you don’t know where your money is going, how are you going to manage it? Rather, at the beginning of the month, assign every dollar a name and create a budget. Then throughout the month, track where your money is going.
Not knowing what money you have or where it’s going is extremely scary! And this can be avoided by making a simple budget. Remember, a budget gives you freedom. It is not restricting!
Buying a Brand New Car
There are a few reasons why this is a scary idea. First, most people can’t afford a brand new car so they most likely are taking out a car loan–which we’ve already gone over is frightening.
Second, a brand new car loses about 19% of its value in the first year… Why would you spend so much on an “asset” that depreciates so quickly? After 5 years, a brand new car will have depreciated about 63%, and depreciation will slow down significantly then.
Save yourself the trouble and frightening experience and purchase a new-to-you vehicle that is about 5 years old. This way avoiding that massive depreciation and car loan.
Eating Out
Scary but delicious. Especially as millennials, we love eating out! It’s about the food, but even more so about the experience and time we get to spend with friends. But this can be the biggest budget-buster for most millennials.
You don’t have to deprive yourself of a meal out with friends, but this is something to be mindful of before it becomes something that takes over your budget.
Create a line item in your budget for eating out, but make sure you are sticking to the budget! The eating out category in your budget doesn’t have to be scary. Give yourself some modest permission to spend at your favorite restaurants with friends.
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Let Me Know Below!
What’s a scary money decision you’ve either made or have promised you’ll never make?