5 Money Mistakes To Avoid Right Now
Money mistakes is something you want to avoid during an uncertain time like now. Unfortunately, during times of uncertainty, people will start to make poor financial decisions. Poor money decisions made now can really cost you financially down the line.
Here are five money mistakes to avoid making during uncertain times like now.
You stop making your bill payments
Money is tight for so many people and without money to pay your bills, your first move may be to not pay them at all. This is a big money mistake you don’t want to make. Most lenders are offering some type of relief for consumers but you need to take action and call them. You may get your mortgage lender to pause your payments and your credit card issuer to waive late payments. Just make sure to get all the details before entering into a hardship program. The last thing you want to do is agree to something that may hurt you financially further down the line once this pandemic passes.
The major downfall of not paying your bills is not just that they will accumulate but that you will wind up negatively affecting your credit. Once you get a negative reporting to the credit bureaus, you can expect your credit score to drop. This will then make it more difficult for you to secure a loan of any sort during this uncertain time and after.
You put a pause on saving
If you’re lucky enough to still have a job, you may be tempted to take your coronavirus stimulus check and buy that new TV you’ve been eyeing. Before you make a big money mistake and use that money for indulgences, pause and take a look at your long term financial goals. Are you currently saving enough for retirement? Do you have an emergency fund in place? Are you saving for college? Unless all these items are covered, your best bet is to avoid that money mistake and put those dollars towards more important things.
Using your retirement savings to pay bills
If you were to tap into your IRA or 401K any other time than now, you would be subject to a penalty. With the CARES act in place, you can currently withdraw up to $100k from your retirement savings without any penalty. Although that may seem like a tempting option, you are risking falling financially short down the line. For that reason, you want to make sure you have exhausted all other relief options. Keep in mind you have the stimulus check, unemployment if you lost your job plus relief that is being offered from lenders and service providers. If after all this you still are not in a place where you can survive financially, then go for it.
Waiting on filing your taxes
The tax filing due date for this year has been pushed out to July 15. If you fall under the group that owes the IRS money from 2019, you have a few months to figure out how to make the payment. If you normally receive a refund, there is no reason to hold off on filing. The sooner you get your refund, the better equipped you will be to weather these times.
Don’t wait to sign up for unemployment benefits
If you’ve lost your job like so many, you most likely are entitled to unemployment benefits. The amount you will receive varies by state. With the COVID-19 relief package, workers can collect an additional $600 per week on top of their normal unemployment benefit. For this reason, don’t make the money mistake of waiting to apply. Although the process is still slow in some states, you want to get your application in as quickly as you can.