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Financial Literacy Month blog

We hope you enjoy reading some of our thoughts as we join you on the path to financial wellness and we encourage you to yours. If you would like to follow our path on a more micro-level, we will be using twitter to chronicle our days.

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Clearing the Path

Posted by Kim McGrigg on 4/25/2008

Today’s step is about uncovering and removing the obstacles that may keep you from meeting your goals. Following are some top money wasters to look out for.

-Credit card interest. The average interest rate on a credit card is currently more than 13 percent. Credit card interest charges are a waste of your money and should not be considered an acceptable part of your budget.

-Failure to manage your money. If you are not on top of your investment strategy or are not sure that you even have a strategy, it is time to take control. People who understand interest earn it, people who don’t pay it.

-Poor loan decisions. Just because you qualify for a loan doesn’t mean you can afford the payments. Things like 110 percent mortgages and 72-month car loans are financial suicide.

-Relinquishing control. Don’t cosign a loan or lend money unless you are comfortable with the fact that you may never see your money again. Think carefully before blending finances with a significant other until you have legal protections, such as a marriage might offer.

-Not expecting the unexpected. At the very least, be prepared for periodic expenses such as auto repair bills and the winter holidays. Ideally, you should also be prepared for medical debt, divorce, and a job loss; even if you are lucky enough to avoid these financial disasters.

-Over-withholding. Having the IRS withhold more taxes than necessary is a bad idea. There is no reason to take your hard-working money out of commission. Just think, if your annual refund is $1,000, that means you could increase your take-home pay by more than $83 a month.

-Jeopardizing your future. If you withdraw money from your 401(k), you will have to pay tax plus a 10 percent penalty on any money withdrawn. The total tax bill will probably come to about 37 percent of the money you withdraw.  Of course, there are some exceptions.

Finally, try to avoid emotional spending. Remember, shopping is not a recreational sport. For help, read MP Dunleavey’s article titled 7 ways to control your emotional spending.
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