Every action has its reaction. This is the law of nature. It applies just as same to your finances as to your life. While the wise financial decisions you make help you get out of debt, there are certain money practices that hurt your finances.
Practices That Hurt Your Finances
When you are facing financial difficulty often we try to take the shortcut to fix the problem. These band-aid fixes can do more harm than good. As a result, you may end up with consumer debt that is uncalled for. So let’s look at some practices that hurt your finances.
Your 401(k) is your security blanket in your retirement. Although these types of loans have a lot of positives, the negatives probably override them. Once you take the loan, if you have to leave the current employer, you are required to pay off your loan, typically within 60 days. If not, it can be considered a withdrawal. This downside is in addition to the fact that you are actually dipping into your retirement savings.
Missed Loan Payments
If you miss loan payments, contact your lender and ask permission to temporarily stop payments. It’s frequently done with student loans but can also apply to car payments and even mortgages. Once you defer your loans, the interest typically piles up and adds up to the principle. This will, in turn, stretch the length of your loan.
Although it is a fast and easy way to get some cold hard cash, payday loans is one of the practices that hurt your finances the most. Unless there is a solid plan in place to repay your payday loan, you are bound to accumulate too much debt in your portfolio.
Sometimes you are likely to get away with these short-term fixes. However, what if relying on short-term fixes to solve your money problems is becoming a habit? Then it can lead to dangerous territory and make managing debt even more difficult.
If you are seeking assistance with debt management counseling speak with a certified counselor at ACCC today! Call 800-769-3571.