Does Earnest Money Get Applied To Closing Costs
Proper management of your personal finances is necessary so that you can live the life you want and ensure a secure future. One wrong money move could put your financial health in danger, so it's important to make sure you're taking the right steps when it comes to minding your money. Here are some money mistakes you must avoid at all costs.
1. Carrying a credit card balance from month to month
Carrying a balance from month to month will keep you in debt indefinitely. Put yourself out of your monthly misery, and pay down your debt once and for all. Certified Financial Planner Mathew Dahlberg, founder of wealth management firm Main Street Investments, said it's best to kiss that debt good-bye as soon as possible. "One mistake I often see is a client carrying a balance on a credit card each month on which they are not getting a promotional rate," he said. "For example, the client may have a small amount on their card and run the balance up and down over the course of several years. The problem, of course, is that this type of 'bad debt' has such a high cost."
Dahlberg continued to illustrate his point:
For example, if a person carries an average balance of $1,000 on a typical credit card for one year, they could be paying between $200 and $300 of annual interest costs. While this may not be a large sum to the typical consumer, this is one category of financial leakage that can drag down a person's ability to save, especially over the long term. I advise our clients to remember that when they hear the word 'debt' they should immediately think 'dependence' and 'risk.' While debt can of course be a valuable tool, it can add risk to a transaction, while at the same time limiting a person's choices.
2. Ignoring small bills
Just because a bill is not large doesn't mean you should ignore it. You could still get sent to collections. Personal finance expert Sonya Smith-Valentine, founder of Financially Fierce, said it's important to be responsible with your bill payments, no matter how small. "One of my top money mistakes that people should avoid is failing to pay a small bill (for example, a $20 missed appointment fee charged by a doctor's office). The small bill will morph into a mountain of problems," she said.
Here's how Smith-Valentine said that small bill becomes a bigger problem over time:
Small bills usually get sent off to collection agencies pretty quickly. The collection agency adds in collection fees so that the bill becomes larger. The collection agency then reports the collection account to your credit report. Your credit score then drops 50 points or more. Even if you pay the collection account off, the collection remains on your credit report. The account is just updated to show paid (but not removed from your credit report). Your credit score does not jump back up 50 points because you paid the account off. Your ability to get new credit is affected as you will have to pay higher interest rates (due to a lower credit score). So the $20 fee has now cost you 50 points on your credit score and thousands more in interest.
3. Not saving for emergencies
It's not a matter of if, but when an emergency will arise. Don't leave things up to chance. Jaycob Arbogast, financial planner and founder of Arbogast Advisers, said it's important to start saving for a rainy day now. "Most young people just keep track of their bank account balance, but don't have an actual savings plan or budget in place. The old adage of 'pay yourself first' is a great technique to help get your savings under control," Arbogast said. "Each time you get a paycheck, take a big part of it and put it in savings. Then leave it there and don't take it back out. If you wait until the end of the month to save whatever you have left in your bank account, you'll probably have spent it all and have nothing to save."
4. Failing to pay bills on time
Your payment history accounts for 35% of your FICO credit score. Frequent late payments will hurt you. Amy Tierce, regional vice president of Wintrust Mortgage, advises staying on top of bills and making sure to pay them in full and on time, every time. "Ironically people with plenty of cash flow can be sloppy about paying their bills. Being 30 days late on a credit card can make a significant difference in a credit score," said Tierce.
5. Ignoring an IRS Notice
Don't ignore the IRS. They will find you and make you pay what you owe. "You may file every return without error and have no legitimate reason to worry about hearing from the IRS. However, it's important to remember that a percentage of taxpayers are chosen for audit purely at random," said Nicole Erwin, an associate licensed tax professional for Tax Defense Network, LLC. "Whether you receive notice of examination or a letter regarding a tax bill you overlooked, don't make the mistake of disregarding it," she said. "Any IRS notice requires a prompt response and may entail some type of action on your part, such as providing information or payment. You can ultimately resolve any IRS concern, but you must address it. Failure to do so will only provoke further, more aggressive IRS letters and action."
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Does Earnest Money Get Applied To Closing Costs
Source: https://www.cheatsheet.com/money-career/5-money-mistakes-to-avoid-at-all-costs.html/
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