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7 Worse Financial Mistakes You Can Make

August 22, 2017 By Thinking of Someday

There are plenty of financial mistakes that people are bound to make during their lifetime. And if you’re guilty of these same mistakes we’re about to cover in this post, you’re not alone. We were once actually guilty of them as well before we each started our debt free journeys. However, when you know better you do better <hopefully>. So not only are we going to discuss the financial mistakes, but we’re going to share ways to avoid them / overcome them as well. Let’s get started, shall we?

1. Not Doing A Budget

If you’re not doing a budget it’s probably because you feel like doing a budget will be restrictive. However, we’re here to tell you that doing a budget is far from being restrictive. It’s only restrictive in regards to the amount of money you have to spend, which isn’t a bad thing if you’re trying to avoid debt or get out of debt.

So… Budget. Budget! BUDGET! Not doing a budget means that your money isn’t going where you want it to go efficiently. Metaphorically speaking…

  • It’s like putting water in a bucket that has some holes in it. You might keep some of the water, but you will spill some as well.
  • It’s where the rubber meets the road.
  • It’s each step in your marathon towards financial independence.
  • It’s like the radar in a plane.
  • Doing a budget is where you and your spouse can get intentional about what you want to accomplish.
  • It’s where the talk ends and the action begins.

read: 3 Ways You’ll Learn To Love Your Spouse More With Budgeting

The budget is it. It’s the most important step that you can take towards gaining control of your finances, getting out of debt, and reaching many other goals. The budget is the limit!

read: How To Get Started With Doing A Zero-Based Budget 

2. Not Getting Out Of Debt

Carrying debt can be a burden within itself. It can be emotionally and mentally stressful. And of course, stress can affect your health. Thinking about your debt can take your mind away from the things in your life that are more important.

Also, your income is tied up in paying people back instead of going to paying yourself or other things that you want or even need to do. By using debt to pay for things, you’re helping other people become rich off of the interest you’re paying to them, instead of helping yourself become rich. Basically, the borrower is slave to the lender. There’s no other way to put it. So instead of continuously borrowing money, why not get out of debt and instead save for the things you want and need?

3. Still Using Credit Cards While Trying To Get Out Of Debt

Many people justify the use of credit cards because of the perks and points associated with them. However, only 1 in 10 people actually pay the full balance of their credit card off each month.

Is it possible to use a credit card responsibly? Yes. However, if the use of credit cards is what got you into debt trouble… Then why would you continue to use it? Doing the same thing over and over and expecting a different outcome is the definition of insanity. So while trying to get out of debt, don’t use your credit card which is only adding more debt to your current debt. It’s counter-productive.

side note: Since using credit cards while getting out of debt should be a no-go, then it should be the same for using debt in general. If you’re trying to get out of debt don’t take on more debt during your “get out of debt journey”. And while you’re at it, just stop using debt even once you’re out of debt. Why go back into debt when you worked so hard to get out?

4. Living Beyond Your Means

This is all related and goes hand in hand with each other. If you’re living beyond your means you’re probably doing so by racking up lots and lots of debt. To help you live below/within your means, doing a budget will help. A budget will be able to show you what you can and can’t afford if you’re being realistic and honest with yourself when doing your budget.

5. Not Having An Emergency Fund

We’ve all had it happen before where something comes up and we’re not prepared. You randomly get nails in 3 tires that can’t be patched. Or you have an ER visit for your kid and you’re waiting for the bills to start rolling in. Or your furnace goes out in the middle of winter. Stuff will happen whether you’re prepared for it or not. Having an emergency fund can help make a stressful situation less stressful.

If you’re getting out of debt then you need to have a mini emergency fund. We had $2000 when we were working on getting out of debt. You can have as little as $1000, but we were more comfortable with $2000. We liked the idea of $2000 so that if an emergency did occur, we didn’t necessarily have to stop our debt-free journey in order to build up our mini emergency fund to $1000 again.

Once you’re out of debt, then your emergency fund needs to increase to 3 to 6 months worth of expenses (even a year’s worth won’t hurt). The point of this is to keep you from using credit cards when you’re trying to get out of debt. And so that you won’t go back into debt if an emergency occurs once you’re out of debt.

6. Comparing Yourself To Others

It’s normal to compare yourself to others, but it can become an unhealthy habit. It can make you feel bad about yourself and what you’ve accomplished up until this point. We tend to not compare ourselves to someone who isn’t doing as well as us (in our mind). However, you don’t know the specifics of someone else’s situation and what he/she went through to get there – that can be the good or the bad. So while you can use that person as (possible) inspiration, run your own race and focus on your own journey.

read: The Dangers Of Comparing Yourself To Others

7. Not Saving For Retirement

This is a big one that people often times think about too late (or when it’s too late). You go through life earning an income for the present day and trying to enjoy life knowing that one day you won’t want to work any longer (or be able to work any longer). However, you’re not putting anything away for that day. Or you feel like you can keep putting off on saving for retirement because, “That’s always something I can do later.”

Being unprepared for retirement can cause you to have to work for longer than you want to. Sometimes it can even put the burden on other family members to have to be able to help you financially once you do retire. So do yourself and your family a favor and save for retirement, even if you’re only in your 20’s or 30’s, and especially if you’re in your 40’s. There should be no excuses. Afterall, it is possible to enjoy life now without sacrificing your future.

read: Is Social Security Enough For Retirement?

Final Thoughts

While it may seem like it’s hard to stop making these financial mistakes or even unnecessary to stop making them, it is more than possible and it is important to do so.

Are you guilty of making any of these financial mistakes or any other that are not listed here?

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Filed Under: Personal + Finance Tagged With: budget, life tips, money

See what’s happening on Instagram…

thinkingofsomeday

As of 1/8/2022, it’s been one year since we beca As of 1/8/2022, it’s been one year since we became mortgage free. What better way to celebrate than a date night in our paid off home?! 😏
⠀⠀⠀⠀⠀⠀⠀⠀⠀
So how does it feel?
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Financially, we invested the most money we've ever invested. We also increased our lifestyle a bit as well to keep a healthy balance.
 ⠀⠀⠀⠀⠀⠀⠀⠀⠀
Kim’s Perspective: 
⠀⠀⠀⠀⠀⠀⠀⠀⠀
It’s been great. For the longest it felt surreal and unbelievable that we actually did it. I never really worried about paying off the mortgage because I knew that worst case scenario, it would be paid off in 15 years, which would’ve been when we were 45 (and that’s not a bad age at all). However, it’s been nice to know that it’s not something that Omar is stressing over anymore. And since it was one of his biggest dreams/goals, it’s nice knowing that I was able to support him 100% of the way in making this happen for us and our family. I’m glad this is something he wanted to pursue and that I was actually on board with it. What I’ve enjoyed most about it is being able to spend more money (of course 😆) because a lot of things were put on hold while we focused on the payoff. So now I feel like I’m at that point where I can make our house more of a home for us. It literally feels like we’re in a new space (mentally and physically) and we’re loving it.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Omar’s Perspective:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
This past year has probably been the best year I've had in life. I've been the least stressed I've ever been, but took on the most responsibility at work I've ever taken on which lead to a promotion and an increase in income. This boggles my mind as more responsibility at work usually means more stress. I feel like I’ve been able to focus on other areas of my life more (my health/weight as well as making more of an effort to maintain my relationships with friends/family). Most importantly, I realize the strength of my marriage.  With the state of dating/relationships these days, I realize I won the lottery with Kim.  She's an amazing wife and mother. We've always had a good relationship but we're stronger than ever.  We started from the bottom now we're here (in my Drake voice). 🎶 #thislifeafterdebt
After taking some time to think about what we want After taking some time to think about what we wanted to focus on for this year, we decided that our word for the year is health.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Overall we both want to continue making healthier choices when it comes to eating. And we both want to focus on exercising more than we have in the past and be way more consistent with it.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
At the end of the day, what’s money, financial freedom/independence and wealth if you’re not healthy? And we definitely have high blood pressure, diabetes, etc that run in our families. We have kids to live for and that’s what we plan to do to the best of our ability!
This is what our financial goals ended up looking This is what our financial goals ended up looking like for this year. We’re pretty pleased with the outcome and the fact that we still enjoyed ourselves throughout the year and even made some pretty big purchases (like that whole couch saga I shared in my stories 😆). We’re looking forward to seeing what the next year holds! #thislifeafterdebt
We didn’t officially choose a word for 2021, but We didn’t officially choose a word for 2021, but if we had to say a word that was our word for this year it would be “intentional” by far.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
At the end of 2020 and beginning of 2021 we were very intentional about pulling money from an inherited IRA so that our tax bill wouldn’t be ridiculous like it would have been if we pulled a lump sum at one time. We then used the money to help pay off our mortgage 8 days into 2021.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
What we were even more  intentional about was our plan for what we were going to do with our mortgage payment once we didn’t have a mortgage anymore. We didn’t want to frivolously spend that money. So we actually came up with our plan a couple months before making our final payment. But literally after that payment on January 8, 2020, our new mortgage-free budget was in full effect! So yea, “intentional” is definitely a good word to sum up 2021 for us. #thislifeafterdebt
Some of the things we automate are:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Our Budget:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
For the longest we use to type everything we were going to spend or save into our budget template. It wasn’t super time consuming but it wasn’t efficient when it came to our regular bills/expenses. Then one day we decided to prefill the template and copy and paste it month to month for our regular bills/expenses. All we have to do is add anything else we spend.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Savings / Investing:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Most of our savings/investing and even our gas and spending money our automated transfers. It beats having to go in and make multiple transfers to our personal accounts and our sinking funds. The 529 accounts for the kids and the Roth IRAs are automatically transferred. But for the brokerage account we have to manually transfer the money because it’s never the same amount each paycheck.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Bill Pay:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
I’ve never been a fan of bill pay because I don’t like companies having that type of access to my money. 🥴 And whenever they mess up and charge you too much, they’ll try to just credit your account instead of putting the money back in your bank account. 🙄 However, I’m a tad bit more trusting these days. Lol. Our home alarm had no option but to be auto drafted. Since the amount wasn’t much and is always the same price, I agreed. And the only other bill auto drafted is our cell phone bill after many many years (gasp! haha). Some of the other bills are paid via online bill pay via our banking account. #thisfinancialconfession
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Doing all of this has been a game changer and time saver. Are you team automate or team manual?
It’s been a minute since I’ve made a charcuter It’s been a minute since I’ve made a charcuterie board. So I figured Christmas brunch was the perfect time. And plus, that meant less time in the kitchen for me with cooking because I knew I was going to be cooking dinner today. #piecesofsomeday
Merry Christmas! And 2 pictures because it’s gua Merry Christmas! And 2 pictures because it’s guaranteed that someone isn’t going to be looking. 😆 #christmas2021 #piecesofsomeday
We purchased our house for $168.5k (after the down We purchased our house for $168.5k (after the down payment). We refinanced at $165k.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
If we took 30 years to pay it off, our total would’ve been $293k.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
If we paid the 30-year mortgage like a 15, then it would’ve been $225k.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
After we refinanced to a 15-year, if we took 15 years to pay it off, then our total would’ve been $205k.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Instead, we paid off our mortgage in a little over 7.5 years.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
We ended up paying a total of $200k with interest.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Paying $200k for this home with how it looked when we purchased it sounded a lot better than having to pay a total of $293k if we end up being here for 30 years! This was yet another factor that helped us decide to pay it off early. #thislifeafterdebt
Part of the reason we decided to refinance and eve Part of the reason we decided to refinance and even pay our house off early is because of the amount of money we were paying in interest on our mortgage. So of course, several months after we paid off the mortgage I began to wonder just how much did we really pay in interest. So I asked Omar if there was a way to figure it out. At first he was like, “Really Kim?” 😳 And of course I was like, “Ummm yea.” 😬 Lol.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Jun 2013 is when we bought the house. So there wasn’t much interest paid then.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
2014 and 2015 is still when we had the 30-year mortgage. It’s also the years that we paid the most interest. We refinanced at the end of 2015.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
2016 is when we made our first payment with the 15-year mortgage. It’s crazy how the amount of interest decreased based off that alone.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
2019 is when we decided to pay off our mortgage early. It was supposed to take 6 years. But instead we used RSUs and sped it up tremendously.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Jan 2021 is when we paid it off before our first payment would’ve been due. $27 was the last bit of interest we paid on our mortgage.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Grand total: $35,102.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
If we had continue to just make regular payments on the 15-year mortgage, we would’ve paid a total of $56,279. A difference of $21,177. 🙌🏽 🙌🏽 #thislifeafterdebt
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Hey! We’re Omar + Kim.

A married couple making someday a reality all while balancing family + finances + avoiding debt. Find out more about us, here.

subscribe + receive post updates

See what’s happening on Instagram

thinkingofsomeday

As of 1/8/2022, it’s been one year since we beca As of 1/8/2022, it’s been one year since we became mortgage free. What better way to celebrate than a date night in our paid off home?! 😏
⠀⠀⠀⠀⠀⠀⠀⠀⠀
So how does it feel?
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Financially, we invested the most money we've ever invested. We also increased our lifestyle a bit as well to keep a healthy balance.
 ⠀⠀⠀⠀⠀⠀⠀⠀⠀
Kim’s Perspective: 
⠀⠀⠀⠀⠀⠀⠀⠀⠀
It’s been great. For the longest it felt surreal and unbelievable that we actually did it. I never really worried about paying off the mortgage because I knew that worst case scenario, it would be paid off in 15 years, which would’ve been when we were 45 (and that’s not a bad age at all). However, it’s been nice to know that it’s not something that Omar is stressing over anymore. And since it was one of his biggest dreams/goals, it’s nice knowing that I was able to support him 100% of the way in making this happen for us and our family. I’m glad this is something he wanted to pursue and that I was actually on board with it. What I’ve enjoyed most about it is being able to spend more money (of course 😆) because a lot of things were put on hold while we focused on the payoff. So now I feel like I’m at that point where I can make our house more of a home for us. It literally feels like we’re in a new space (mentally and physically) and we’re loving it.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Omar’s Perspective:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
This past year has probably been the best year I've had in life. I've been the least stressed I've ever been, but took on the most responsibility at work I've ever taken on which lead to a promotion and an increase in income. This boggles my mind as more responsibility at work usually means more stress. I feel like I’ve been able to focus on other areas of my life more (my health/weight as well as making more of an effort to maintain my relationships with friends/family). Most importantly, I realize the strength of my marriage.  With the state of dating/relationships these days, I realize I won the lottery with Kim.  She's an amazing wife and mother. We've always had a good relationship but we're stronger than ever.  We started from the bottom now we're here (in my Drake voice). 🎶 #thislifeafterdebt
After taking some time to think about what we want After taking some time to think about what we wanted to focus on for this year, we decided that our word for the year is health.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Overall we both want to continue making healthier choices when it comes to eating. And we both want to focus on exercising more than we have in the past and be way more consistent with it.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
At the end of the day, what’s money, financial freedom/independence and wealth if you’re not healthy? And we definitely have high blood pressure, diabetes, etc that run in our families. We have kids to live for and that’s what we plan to do to the best of our ability!
This is what our financial goals ended up looking This is what our financial goals ended up looking like for this year. We’re pretty pleased with the outcome and the fact that we still enjoyed ourselves throughout the year and even made some pretty big purchases (like that whole couch saga I shared in my stories 😆). We’re looking forward to seeing what the next year holds! #thislifeafterdebt
We didn’t officially choose a word for 2021, but We didn’t officially choose a word for 2021, but if we had to say a word that was our word for this year it would be “intentional” by far.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
At the end of 2020 and beginning of 2021 we were very intentional about pulling money from an inherited IRA so that our tax bill wouldn’t be ridiculous like it would have been if we pulled a lump sum at one time. We then used the money to help pay off our mortgage 8 days into 2021.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
What we were even more  intentional about was our plan for what we were going to do with our mortgage payment once we didn’t have a mortgage anymore. We didn’t want to frivolously spend that money. So we actually came up with our plan a couple months before making our final payment. But literally after that payment on January 8, 2020, our new mortgage-free budget was in full effect! So yea, “intentional” is definitely a good word to sum up 2021 for us. #thislifeafterdebt
Some of the things we automate are:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Our Budget:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
For the longest we use to type everything we were going to spend or save into our budget template. It wasn’t super time consuming but it wasn’t efficient when it came to our regular bills/expenses. Then one day we decided to prefill the template and copy and paste it month to month for our regular bills/expenses. All we have to do is add anything else we spend.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Savings / Investing:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Most of our savings/investing and even our gas and spending money our automated transfers. It beats having to go in and make multiple transfers to our personal accounts and our sinking funds. The 529 accounts for the kids and the Roth IRAs are automatically transferred. But for the brokerage account we have to manually transfer the money because it’s never the same amount each paycheck.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Bill Pay:
⠀⠀⠀⠀⠀⠀⠀⠀⠀
I’ve never been a fan of bill pay because I don’t like companies having that type of access to my money. 🥴 And whenever they mess up and charge you too much, they’ll try to just credit your account instead of putting the money back in your bank account. 🙄 However, I’m a tad bit more trusting these days. Lol. Our home alarm had no option but to be auto drafted. Since the amount wasn’t much and is always the same price, I agreed. And the only other bill auto drafted is our cell phone bill after many many years (gasp! haha). Some of the other bills are paid via online bill pay via our banking account. #thisfinancialconfession
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Doing all of this has been a game changer and time saver. Are you team automate or team manual?
It’s been a minute since I’ve made a charcuter It’s been a minute since I’ve made a charcuterie board. So I figured Christmas brunch was the perfect time. And plus, that meant less time in the kitchen for me with cooking because I knew I was going to be cooking dinner today. #piecesofsomeday
Merry Christmas! And 2 pictures because it’s gua Merry Christmas! And 2 pictures because it’s guaranteed that someone isn’t going to be looking. 😆 #christmas2021 #piecesofsomeday
We purchased our house for $168.5k (after the down We purchased our house for $168.5k (after the down payment). We refinanced at $165k.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
If we took 30 years to pay it off, our total would’ve been $293k.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
If we paid the 30-year mortgage like a 15, then it would’ve been $225k.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
After we refinanced to a 15-year, if we took 15 years to pay it off, then our total would’ve been $205k.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Instead, we paid off our mortgage in a little over 7.5 years.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
We ended up paying a total of $200k with interest.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Paying $200k for this home with how it looked when we purchased it sounded a lot better than having to pay a total of $293k if we end up being here for 30 years! This was yet another factor that helped us decide to pay it off early. #thislifeafterdebt
Part of the reason we decided to refinance and eve Part of the reason we decided to refinance and even pay our house off early is because of the amount of money we were paying in interest on our mortgage. So of course, several months after we paid off the mortgage I began to wonder just how much did we really pay in interest. So I asked Omar if there was a way to figure it out. At first he was like, “Really Kim?” 😳 And of course I was like, “Ummm yea.” 😬 Lol.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Jun 2013 is when we bought the house. So there wasn’t much interest paid then.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
2014 and 2015 is still when we had the 30-year mortgage. It’s also the years that we paid the most interest. We refinanced at the end of 2015.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
2016 is when we made our first payment with the 15-year mortgage. It’s crazy how the amount of interest decreased based off that alone.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
2019 is when we decided to pay off our mortgage early. It was supposed to take 6 years. But instead we used RSUs and sped it up tremendously.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Jan 2021 is when we paid it off before our first payment would’ve been due. $27 was the last bit of interest we paid on our mortgage.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
Grand total: $35,102.
⠀⠀⠀⠀⠀⠀⠀⠀⠀
If we had continue to just make regular payments on the 15-year mortgage, we would’ve paid a total of $56,279. A difference of $21,177. 🙌🏽 🙌🏽 #thislifeafterdebt
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