While many people accidentally screw up their finances, there are plenty of sure-fire techniques that will lower your credit score so that every lender runs away from you. Once you know these dangerous techniques, you can do the opposite to keep your finances healthy.
#1: Don’t Bother Comparing Credit Cards
Image via Flickr by StormKatt
If you really want to destroy your finances, choose a credit card without comparing annual fees or interest rates with other offers. There’s a good chance that you’ll choose a card that gives you terrible rates. That will help your debt blossom quickly.
#2: Don’t Pay Your Credit Cards Off Every Month
Once you have your high-interest credit card, don’t bother paying any more than the minimum. Hey, the minimum will keep the credit card company off your back, so what’s the point?
Let’s say you have a $5,000 balance on a credit card that charges you 18 percent interest. You pay the minimum, which is probably somewhere around $125. That feels pretty good because no one calls to hassle you.
What you might not know is that you’re putting yourself in a nearly endless cycle of debt. If you keep making the minimum payment, then you’ll pay off your debt for nearly 23 years!
Let’s say you pay $250 instead of $125 each month. By spending an extra $125 a month, you’ll pay off your debt in two years. That 21 years sooner than if you kept playing the minimum.
#3: Keep Getting More Credit Cards
Some credit card companies will give you an easy out. If you transfer your current balance to a new card, you don’t have to worry about those high interest rates. Instead, you get to take advantage of introductory rates.
That might seem great until reality sets in. First, you’ll have to pay transfer fees that add to your overall debt. Then you’ll find that your new rate expires quickly (some cards won’t even let you use the intro rate on transfers).
To make matters even worse, you can’t keep transferring the balance to other cards. Even the worst credit card will eventually turn you down for having poor credit.
#4: Don’t Worry About Health Insurance
Health insurance will cost you a couple hundred dollars a month… and that’s if you’re healthy and willing to carry a high deductible. You don’t really need health insurance, right?
Don’t be so sure. If you don’t have health insurance, you might have to pay outrageous fees to see the doctor. That means you stay sick until you have to visit the emergency room, which has an even higher cost.
There’s no doubt that health insurance costs a lot of money, but it’s well worth it when you get sick or have an injury. Paying out of pocket will drain away your savings quickly.
#5: Don’t Worry About Your Credit Report
You can get a free copy of your credit report once a year to make sure your information has been recorded accurately.
If you really want your finances to get screwed up, don’t worry about it. 20 percent of credit reports have inaccurate information. The longer you wait to check yours, the more likely it is that inaccurate information will pull your credit rating down.
#6: Don’t Invest Your Money
Staying in the present instead of looking to the future is a great way to screw up your finances. If you don’t let financial professionals put your money into stocks, bonds, and other investment products, then every dollar you own will become worth a little less with each passing day. Be sure not to invest in your retirement or find annuity assist either, because you don’t want to have a financially stable retirement.
That would frighten a normal person. But you’re trying to screw up your finances, so stick your money under your mattress instead of investing. That’s the way to ensure that the money never gains more value.
#7: Do Your Own Taxes
Doing your own taxes can seem like an easy way to save money. You could even choose online software that walks you through the process.
Some states have found so many mistakes in TurboTax returns that they advise residents not to use the software. The more mistakes you have, the more likely it is that you’ll pay more than necessary. If you’re really lucky, you’ll face outrageous fines once the IRS notices the mistakes.
There are plenty of ways to screw up your finances. If you’re looking to lose a lot of money and have no financial security, try one of these terrible methods.