Women and Money Mistake #2

Danger – The Monthly Payment Can Be Hazardous to Your Wealth

“I can afford that!”

Ahh, the dreaded monthly payment trap has placed more than a few buyers onto a trecherous financial tightrope. One false move, one unexpected life transition, and you are thrown into a chasm of debt with no safety net. Owing more on a car or house than it is worth, you can’t get out from under the debt. You have no equity … just an “affordable” payment that has you bound. You have voluntarily given up your future power of choice.

Want to avoid that trap? Here is what you need to look for:

Every disclosure statement states your purchase price, the interest rate you are paying and the total cost of an item based on the term of the loan and the interest paid.

• Look at total cost of an item (principal and interest).
• Compare interest rates to the loan term. The shortest loan term often has the lowest interest rate.
• Never pay only the minimum credit card payment. The sale item you thought was such a great deal has become a very expensive purchase.
• Take a time out. The urgency to purchase, the newness of a vehicle or home, often clouds your judgment. Walk away and take time to let the emotions of the purchase subside and let the reality of the long-term payment commitment sink in.

Think twice before making a purchase decision based on the payment. That’s a money mistake that can be hazardous to your wealth!