Most Americans, no matter who they are, carry some form of debt be it a mortgage, auto or student loan.
It’s unfortunate that a number of people haven’t got this right because financial well-being isn’t that difficult to achieve.
That said, here are 3 financial management errors that you should avoid:
#1: Paying off small debts first
People usually pay off their smaller debt while the others with a larger amount of interest tend to accumulate. While it is natural for people to want to clear off debts that are smaller in nature which will give them a sense of accomplishment, not addressing the ones which have a larger rate of interest can cause them to remain in debt. Most of all, if you do manage to clear of these debts, you tend to take it easy after that.
#2: Not realistic enough about paying off debt
In the financial crash of 2008, those with a college degree took on more financial debt than they could manage rather than those with a school diploma. This was largely due to the optimism felt after graduating. It was clear that they were overly optimistic about the future as well. This is why emergency savings are important because the good times aren’t going to last always.
#3: Making only minimum payments
No matter how much breathing room you think you’ve got, making minimum payment is hardly in your best interests. Sadly, this won’t get you out of debt and has been set up for you to stay that way. Instead, try and pay off as much as possible and which will help you break out of that debt cycle.