12 Stupid Mistakes People Make with Their Money by Dan Benson

Author:Dan Benson
Language: eng
Format: epub
Tags: ebook, book
Publisher: Thomas Nelson
Published: 2012-10-31T16:00:00+00:00

STUPID MISTAKE #7

Failure to Use Your Four Powerful Friends

A friend is a present you give yourself.

—ROBERT LOUIS STEVENSON

He had earned a steady, above-average income his entire career. Now, in his early fifties, Jeremy was finally taking time to assess what he had to show for all his hard work—and what he needed to do in order to ensure that he’d have the financial freedom to retire in the next fifteen or twenty years.

Over the years, Jeremy had tucked away extra money in a money market fund whenever his cash flow allowed. He had built up a contingency reserve of $4,200, which he tried to leave alone. He considered this his “fallback” reserve in case of a job loss or other expensive emergency.

He carried balances totaling $2,600 on three of his four credit cards and tried to pay at least $250 each month on those balances. But Jeremy admitted that he often found himself putting additional purchases on his credit cards, which made paying down the balances more difficult. He also owed approximately $5,500 on a car loan, which brought his total consumer debt to $8,100.

Jeremy’s company offered a 401(k), to which he contributed 5 percent of his $50,000 gross income, or $2,500 per year. A few years ago he had borrowed from the plan to take a special vacation, and he now was almost finished making the required payback of the loan.

“Let’s See What’s Holding You Back”

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