Unfortunately, it’s been quite a while since I’ve had time to post anything, so I’m going to try to make up for it over the next few weeks by posting as much as I can. First, I’ve found an interesting article about the three top money mistakes that people make.

From MSN Money: The Three Worst Money Moves You Can Make

This article was interesting to me because it made me realize that many times, we take financial advice from the wrong people. Notice the three mistakes: 1) Paying off credit cards with HEL’s, 2) Borrowing from your 401k and 3) Buying more house than you can afford.

All three of these mistakes can be avoided if you stop to think about who is giving the advice, particularly mistakes #1 and 3. Lenders are particularly good at wording things in such a way that makes you think you’re doing the right thing by borrowing against your house to pay off credit cards. They send you advertisements in the mail that say “Your current monthly payments are $600 when they could be $200.” I get these just about every day and they go straight through the shredder. They’re holding a carrot out there for you, hoping you’ll bite. If you talk to a lender, they’ll say it’s the greatest idea ever. Always keep in mind that these people are there to make a profit for their company and tidy commission for themselves. They do not have your best future interests at heart. Don’t be fooled.

Same goes for buying more home than you can afford. Real estate agents and mortgage lenders and home sellers themselves want you to spend as much as possible. It increases their commissions, their profits, their take-home cash at the end of the sale. But, it may also stretch you to your limit, causing serious problems down the road if you lose your job or run into other financial difficulties, like large medical bills, home repairs, car repairs or other facts of life.

The bottom line is: Keep your head on straight. If you need advice, get it from someone qualified who is not trying to sell you a product or service. Dave Ramsey has excellent personal finance advice. The Motley Fool has a great book out that provides excellent financial advice (Motley Fool Money Guide) and can be a great help when you have questions about specific situations.

The basic point is, don’t let someone else dictate your finances for you. You know what your goals are and you have to think about your own future. This means doing your research, shopping around when you need to and saying “No!” when something is not going to work out for you in the long run.

This entry was posted on Tuesday, December 13th, 2005 at 7:59 pm and is filed under General Personal Finance. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.