While some habits can pave the way to wealth and prosperity, others can lead to financial ruin. Moneymindz provides a guide to overcome 6 FINANCIAL HABITS YOU SHOULD GET RID OF.
Rolling over Credit Card Debt:
Paying only the minimum amount due leads you into a debt trap so always pay off the entire outstanding as quickly as possible. Remember, 36-45% is the annual interest unpaid credit card bills incur.
Overspending on Luxuries:
Outline a specific amount you can allocate to spends like eating out, catching a movie at the multiplex or going away for short breaks in your monthly budget and stick to it to avoid any severe dents in your savings. No more than 30% of your monthly budget can be used for luxuries.
Neglecting Product Maintenance:
Simple maintenance work on your car, AC or even the house can save you a lot of money on repairs and replacements. Putting off routine maintenance will only leave you with a fatter bill.
Using Credit Cards for Rewards:
Avoid swiping your card for every purchase just to earn reward points. List the spends you can make with a card and those you cannot. Purchases worth Rs 75,000 will probably fetch around Rs 450 equivalent of cash in reward points.
Using EMI options for Credit Card Dues:
This can cushion the impact on your cash flow but you are likely to end up paying more than the actual cost of the item, thanks to interest and processing charges. Too many EMI arrangements can also hit the credit score adversely.
Ignoring Credit Score:
Since an individual’s every financial step is recorded in his credit history, maintaining a good credit score is critical for availing loans when in need and at a good rate of interest. Anything below 750 is considered a bad credit score.