Co-signing a loan – Never, ever co-sign a loan. The other borrower will default, you will be stuck with the payment and your credit will be destroyed. Why do you think lenders want co-signers? Because they know borrowers can’t make the payments. The borrower gets the car, and you get the bill.
Buying a car on payments – If you ever want to have financial success, you must stop buying cars on credit. Most Americans could retire with more than $1 million dollars if they invested the money spent on car payments into their retirement accounts. Where do you want to be at age 65 – on a cruise ship or at work paying for your car?
Not paying a Debt Card in full each month – It is called a “credit card,” but it is really a “debt card.” When you buy something on it, you are in debt. Pay it off each month and avoid the interest and fees. Would you pay $12 for a $4 item? That is what you are doing when you run a balance on that Debt Card.
Buying too much house – You should not have a monthly payment that is more than a week’s pay. If your payment is higher than that, you bought too much house. Also, why are you making only the minimum monthly payment on that house each month? Pay it off early and work for yourself instead of the bank.
Impressing others – Many people buy big houses, new cars and fancy clothes to impress others. Do not fall into this trap unless the “others” are paying the bill. When you cannot pay your debts, does it really matter what others think?
Raiding a 401k – You should not use or borrow money from your 401k for any reason. The days of pensions are over. You need to preserve your retirement, because you may be unable to work in later years. If you are able to work in your later years, your 401k savings will give you the option not to. Instead, you can retire and enjoy the freedom to travel and do other things you did not do as much during your working years.
Student loans – These debts are worse than owing taxes. The IRS is warm and fuzzy compared to student loan companies. Also, student loans generally cannot be discharged in bankruptcy. Unless you or your child is going to an Ivy League school, you can get a quality education at a local university while paying as you go. Never co-sign a student loan for anyone, including a son or daughter.
Timeshares – You will spend thousands of dollars for something you cannot sell. For the cost of a timeshare, you can vacation in five-star hotels.
Rent to Own – This is a good deal … if you like paying three or four times the purchase price of an item. Never rent to own.