Just about any person with a job will tell you they work hard for their money. And if you’re like just about everyone on the planet, you probably want to hold on to the money you’ve earned. But there are a number of things that could cause your hard earned money to vanish. Here are 6 things that could make your money go poof!
Poor Spending Habits
One of the most common things that will make your money vanish is wasting it on things you don’t need and can’t afford. Expensive coffee, cigarettes, alcohol, brand-name fashion items, the latest technology, restaurants, gym memberships, and expensive cars are all things people waste money on.
When it comes to spending, always cover your basics, then set aside money for retirement and emergency (and kid’s college funds), and THEN treat yourself to things in moderation.
High credit card interest rates
The average American household with at least one credit card has nearly $16,000 in credit card debt. With interest rates in the high-teens, you could flush a lot of money down the toilet every month on credit card interest payments. However, it’s possible to save hundreds of dollars a year by reducing your credit card interest rate through debt consolidation.
One website called Prosper Marketplace let’s you borrow between $2,000 and $35,000 towards debt consolidation or other personal expenses. Your interest rate could be as low as 6.73% with payback terms of 3 or 5 years. You can get a free loan rate-quote here. Consolidating your high interest credit card debt into a lower rate could save you quite a bit in the long run.
Everyone knows that having car insurance is required by law. But there’s nothing in the law about having overpriced car insurance! Many people are over-paying for their car insurance every month and don’t even know it. Have you shopped around for rates recently? If not, you could be wasting money every month.
Of course, not having the right insurance is even worse than overpaying for insurance. Make sure you know what your insurance covers. For example, many people have home insurance but don’t realize it does not cover certain types of flood damage. Next thing they know they’re out tens of thousand of dollars in damages.
Bad investments or not enough diversification
One way to lose a lot of money fast is by making poor investment decisions. While there may always be a correlation between risk and reward, you should never make an investment that you can’t afford to lose entirely.
But more importantly, you should never have all of your eggs in one basket. You should always diversify your investments so if one goes south, you do not lose everything. Here are a few platforms you can use to diversify your investments and increase your returns:
An easy way to diversify stocks and reduce trading fees
The stock market is obviously a top choice for many investors. But picking the right stocks can be challenging. Even if you can spot trends in the market and economy, finding all of the companies that will be impacted by those trends is exceedingly difficult.
Enter Motif Investing. Motif is a new service that aggregates portfolios of 20-30 stocks based around an idea, belief, or trend. So instead of worrying about finding the right companies, you can focus on investing in the ideas you believe in and let Motif do the rest. And whereas most stock trading platforms charge you anywhere from $5-$10 per stock trade, Motif only charges $9.99 for trading an entire motif of stocks.
A new high-return alternative to stocks
Since its inception just a few years ago, the popularity of peer-2-peer lending platforms continues to skyrocket. These platforms work by allowing investors to fund consumer notes. Prosper Marketplace has proven to be great investment and diversification tools for investors over the past few years, with season returns averaging as high as 11.35%. In fact, every investor who has invested in at least 100 notes on Prosper has experienced positive returns! You can invest as little as $25 per note…
High interest home mortgage payments
While it may not always make sense to refinance, there are a few good reasons to consider doing it, such as shortening the term of your loan, getting out of an ARM (Adjustable Rate Mortgage), consolidating debt or taking out home equity, or a general interest savings of at least 2% (some experts say 1%).
Websites like LendingTree.com all you to compare refinancing rates for your home or car loan so you can see if you can get a better rate than the one you have now. The service is free and there are no obligations to any specific lenders.
Hidden 401k Fees
Many people think they’re all set once they start setting aside money for retirement. But what many people don’t know is that hidden fees in their retirement accounts could be costing them tens of thousands of dollars over the life of the investment.
Be sure to review your retirement plan statement in detail to see what fees you’re being charged. You may even want to consult an expert or search on the internet to see if certain fees are normal. (If you see a fee, Google it).
You work hard for your money and you deserve to keep it. Don’t make these common mistakes that have caused so many to see their funds vanish before their very eyes.
If you need some extra help planning your finances, check out LearnVest.com.They have a free service that helps regular people take control of their finances.