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Top 5 basic personal finance mistakes

Top 5 in a semi ordered fashion:

#1 – Lack of a Budget
Most people do not have a monthly budget.  Infact its staggering how little idea most people have of where their money is going.  When I was first looking into organizing my finances, I realized that I had been spending over $800 a month on eating out.  $800!  A friend of mine that was also organizing their finances figured out that they had spent over $100 a week on CDs and DVDs on average.  This is the absolute first thing to do when you want to clean up your finances.  Check out my budget calculator on the downloads page.

#2 – Missing Bill Payments
How often do you rent a movie, then forget to take it back until it is 3 days overdue?  How about that cable bill that you put off paying?  Small charges for late fees add up.  Lets say in one month you have 2 overdue movies, 1 late bill payment, and 1 late credit card payment.  You could be paying over $50 in fees that are absolutely unncessary.

#3 – Not maxing out your companies match on 401k
This one is simple.  If your company matches, say, 3%, you should be putting at LEAST 3% in every month.  This is FREE money.  FREE!

#4 – Racking Up Credit Card Debt – and then paying the minimum
Spending more than you bring is is a bad idea(suprised?).  Not paying it off quickly is even worse.  This goes along with not having a budget set.  Lets take for example someone I worked with a few years ago.  He bought a brand new TV on his credit card.  He was excited because it was ‘only’ costing him $80 a month.  By the time he was done paying it off, his $2100 plasma TV cost almost $3000. 

#5 – Buying a New Car
This one is near and dear to my heart.  Why?  I am guilty of it.  A new car is one of the absolute worst investments you can make.  Ive seen more people spend too much on a new car than I have seen frat boys passed out on a saturday night (almost) “But Jesse I just started this new job and Im getting paid well….”  then put aside the money you would spend on the new car until you have enough to buy a late model used car. 

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