Money Smarts

5 Money Decisions You’ll Never Regret to Achieve Goals

Nobody has a perfect track record when it comes to managing their personal finances, so it goes without saying that we all make choices with our money that we later regret.

The choices you make with your money today not only affect the present but also your future. Granted, most aren’t financial experts, so we don’t know everything about managing finances. And because of this lack of knowledge, we might make our fair share of financial mistakes throughout our life.

Even if you have a few regrets or feel guilty about some of your past choices, here are five smart money moves you won’t regret.

1. Making an extra mortgage payment

When a friend purchased their first home 5 years ago, they didn’t realize the financial impact of making one extra payment a year. When I started writing mortgage articles I learned how one extra principal payment a year could reduce a 30-year mortgage term by seven to eight years.

You can start paying more toward your mortgage this month. This reduces how much interest you pay over the life of the loan, helps build equity sooner, and pays off the mortgage faster.

2. Saving for retirement at an early age

Just about everyone knows the importance of saving for retirement, but I’m often amazed by the number of people who don’t start planning for the future until they’re in their mid-30s or early 40s.

Understandably, retirement can seem far off when you’re in your 20s. But if you’re a young adult fresh out of college with your first job, opening a retirement account now—whether it’s a 401(k) or an individual retirement account—is one financial decision you will not regret.

Contributing to a retirement account will mean less money on your paycheck, but you probably won’t miss the money. Even if you can’t afford to max out retirement contributions yet, any contribution is better than none, especially if your employer offers a match program.

3. Paying on your student loans while in school

Federal student loans are flexible and accommodating, and you’re not required to start making payments until after you graduate. But this doesn’t mean you have to wait until after you receive your degree to start paying down the student loan balance.

Many federal student loans begin accruing interest from the moment funds are disbursed to your college or university. Interest charges can add up quickly and significantly increase your final balance. You might not earn enough to make large student loan payments while in school, but if you can pay a little each month to knock down the balance, that’s less money you’ll owe once you graduate.

4. Paying off your credit card debt every month

Credit cards are wonderful to have during an emergency when you don’t have access to cash. You can put an emergency home or car repair on your credit card, and pay it off over time.

While the ability to pay over time is a convenient feature, don’t get into the habit of carrying a balance from month-to-month. It’s tempting to use a credit card for impulse shopping, an amazing vacation, and other luxuries. But the longer you carry a balance, the more interest you’ll owe.

Paying off your credit card balance every month might seem impossible. However, resolving to only charge what you can afford and keeping your balance in check will make it easier to pay off balance in full. This is the easiest way avoid massive debt. And if you keep your credit card balances low, you’ll improve your credit score. A good credit score helps you qualify for loans and you’re more likely to receive favorable interest rates.

5. Buying a used car

Buying a brand new car is a good feeling, and there’s no better smell than a new car smell. But if truth be told, a new car is a luxury and not a necessity. I’m not suggesting you go out and purchase a car that’s 10 or 15 years old. However, most cars between one and three years old feature many sought-after amenities, and in most cases, you can’t even tell the car is used. Plus, you can save money with a new car.

A few years ago, a friend went to the dealership looking to purchase a brand new LE model. But after shopping around, she found a previous year model of the exact same car for $4,000 less than the new LE model.

The used car only had 12,000 miles and looked brand new on the inside. There was even a trace of the new car smell. And the best part, the car was an XLE—a step up from the LE. This meant she was able to drive off with leather seats, wood interior, heated seats, a sunroof, JBL sound system and other bonus features. This car retailed for $27,000 the year prior, but she bought it for $20,000.

Takeaway

It doesn’t matter what you’ve done in the past with your money or what mistakes you’ve made, you can wipe the slate clean and make better choices. It’s never too late or too early to start—whether you’re a young adult, middle age or approaching retirement.

What was your best money decision?

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Jason Vitug

Jason Vitug is founder at phroogal, creator of the award-winning project the Road to Financial Wellness, and author of the bestseller and NY Times reviewed book, You Only Live Once: The Roadmap to Financial Wellness and a Purposeful Life.

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