Things You Should Never Do With Your Money, According to Experts
From protecting your finances to wasting on insurance, here's what to know
We all make mistakes with our money. We just do. Let’s not kid ourselves. But in these uncertain times, it’s more important than ever to make sure you’re not your bank account’s worst enemy.
The good news? This may be easier than it seems. Here are eight common financial mistakes people make — and what you can do instead.
1. Don’t waste on homeowners insurance
Even as you read this, you’re almost certainly wasting some money. And it’s likely on something you’d never expect — your homeowners insurance policy.
This probably isn’t something you actively think about. You just know you’re required to have it.
The problem is, you’re paying too much. Luckily, an insurance company called Policygenius makes it easy to find out how much you’re overpaying.
Policygenius has policies starting at $25 a month. And just because you’re saving money doesn’t mean you’re skimping on coverage. Policygenius will make sure you have what you need.
Just answer a few questions about your home to get started.
2. Don’t miss out on life insurance
What would happen to your family if something bad happened to you? Have you thought about how they’d manage without your income if you were gone? How they’d pay the bills? Send the kids through school?
Now’s a good time to start planning for the future by looking into a term life insurance policy.
You’re probably thinking: I don’t have the time or money for that. But your application can take minutes — and you could leave your family up to $1 million with a company called Bestow.
Rates start at $8 a month. Plus, the peace of mind of knowing your family is taken care of is priceless.
If you’re under the age of 54 and want to get a fast life insurance quote without a medical exam or even getting up from the couch, get a free quote from Bestow.
3. Don’t pay your credit card bill
If you’ve got credit card debt, you know just what a nightmare it is — the anxiety, the interest rates, the fear you’re never going to get out…
What makes it worse is your credit card is getting rich by ripping you off with high rates. But a company called AmOne could help you pay them off tomorrow.
Here’s how it works: AmOne will match you with a low-interest loan you can use to pay off every credit card balance you have. The benefit? You’re left with just one bill to pay every month, and because the interest rate is so much lower, you can get out of debt so much faster. Plus, no credit card payment this month.
AmOne won’t make you stand in line or call a bank. And if you’re worried you won’t qualify, it’s free to check online. It takes just two minutes, and it could save you thousands of dollars. Totally worth it.
Well what if I forget to pay my credit card bill?
Rest assured, you’re in good company! Forty-five percent of us have missed a credit card payment at least once in the past five years. But the amount of time that passes between realizing this and sending your payment can lead to different results. If you pay within 30 days of the due date, for example, the credit card company considers it a “late payment,” and they’ll charge a late fee, typically $25 to $40. You might also incur penalties, such as an increased interest rate and lower credit limit.
But if your check or online bank transfer arrives 30 days or more after the due date, the credit card company considers it a “missed payment.” In addition to a late fee and penalties, the credit card company reports this to the three major credit bureaus—Equifax, Experian and TransUnion—causing your credit score to drop by 20 to 100 points. What’s more, this negative mark remains on your credit report for seven years.
Thankfully, if you have a solid history of on-time payments, there’s a simple strategy to erase this from your credit report: Just write a “goodwill letter.” “It’s a request to forgive a missed payment and rescind the report,” says Mike Sullivan, a personal finance consultant with the nonprofit credit counseling agency Take Charge America. If they agree to it, credit bureaus will restore your credit report to the way it was before your missed payment. With Sullivan’s tips, writing a persuasive goodwill letter is easy!
Before you begin writing, call your credit card company’s customer service department, encourages Sullivan. Ask the representative what will make your goodwill letter more effective, such as which details to include—like why your bill was late—and what documentation to provide, such as proof backing up the reason you missed the due date. Then request the name of a person or department who handles goodwill requests, along with their mailing address, so your letter reaches the right place quickly. Also smart: Ask when you’re likely to hear from the credit card company about their decision. This way, you can follow up with another call to check your status.
4. Don’t blow money on car insurance
Ask yourself: How often are you even using your car these days? Regardless of that, there’s one thing we’re nearly certain of: You’re overpaying on car insurance.
That being said, shopping for car insurance is a pain, which is why we like using a free service like Gabi. In just a few minutes, you can see if any other companies are offering a cheaper rate with the same coverage and deductibles you already have.
You don’t have to fill out any forms. Just link your existing insurance account and enter your driver’s license, and it will start looking for cheaper coverage.
They save customers an average of $825 a year. Plus, after you sign up, Gabi will keep looking for savings and alert you if there’s ever a way to reduce that monthly bill even further.
5. Don’t pass up free stocks
The stock market can be intimidating and unpredictable. Stock prices go up and down and up and down. It’s like a roller coaster ride, but it’s not always as fun.
What if you could get stocks for free, though? A company called Robinhood lets you do just that by giving free shares of companies like Microsoft and Facebook.
Yeah, you’ve probably heard of Robinhood. Both investing beginners and pros love it because you can start investing with just $1. Plus, it doesn’t charge commission fees, and you can buy and sell stocks for free — no limits.
To get your free stock, download the app and fund your account with at least a few bucks. This takes no more than a few minutes. Then Robinhood drops a share of free stock into your account. It’s random, so that stock could be worth anywhere from $5 to $500 — a nice boost to help you build your investments.
6. Don’t let your credit score cost you
Your score is like your financial fingerprint. Everyone’s is different and for different reasons.
That means everyone’s strategy to improve their credit score will look different… but how in the world are you supposed to know where to start?
Some websites will try to charge you money to help you fix your score, but there’s a free one called Credit Sesame. It will take a look at your credit report and let you know exactly what you need to do to improve your score.
Take, for example, James Cooper. He didn’t know anything about credit, but Credit Sesame showed him the exact steps he needed to take to improve his score — from a 524 to 801.*
Then there are people like Salome Buitureria, a working mom in Louisiana who, in using Credit Sesame, found a major error on her report. The site helped her fix the mistake and take additional steps to raise her credit score nearly 200 points.*
It takes 90 seconds to sign up and get started.
7. Don’t protect your money with personal passwords
So many of us worry as more and more aspects of our lives migrate online. Though your chances of getting hacked are slim, peace of mind is priceless. So it makes perfect sense that you want to ensure your passwords are strong enough to thwart would-be thieves. Fortunately, these simple tips from cybersecurity expert Rachel Tobac, CEO of Social Proof Security (SocialProofSecurity.com), make it easy to create hack-proof passwords.
A common mistake we make when choosing a password is using information about ourselves, says Tobac. “This may include our name, pet name or address.” Though this is understandable since they’re easier to remember, hackers can often find these details in public databases or on social media. And once they have them, they use software programs that go through every possible iteration in lightning speed—such as Janie321Main and RoverSmith—until they find the one that unlocks your account.
Luckily, there’s a far more secure option. “Instead of creating passwords yourself, use a password manager, a program that generates long, random, unique passwords, then stores them for you so you don’t have to memorize them.” These passwords typically include a combination of at least 16 upper-and lowercase letters, numbers and symbols, a mix that provides the most security. Bonus: You’ll no longer have to remember your account logins since password managers safely keep them in an encrypted file, which means only you can read them. Pick a free password manager to generate and store passwords, like Bitwarden (Bitwarden.com). Or compare paid versions—which cost about 99 cents per month—that offer more options at SafetyDetectives.com/best-password-managers.
Woman’s World has partnered with The Penny Hoarder to bring you expert money saving tips like these.
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