Avoiding Financial Mistakes
There’s nothing funny about making mistakes when they affect your finances. Well, if financial mistakes are the enemy, knowing your enemy is the first step in defeating it. Rob West has a list of those blunders - so you can avoid them. And how do we do that? Well, certainly you want to learn from your mistakes so that you don’t repeat them. And the first step is admitting them. The second step is knowing that God forgives all of our mistakes including those with money. 1 John 1:9 reads, "If we confess our sins, He is faithful and just and will forgive us our sins and purify us from all unrighteousness." So let’s look ahead so we can steer clear of financial mistakes whenever possible. This is hardly an exhaustive list, but these are some of the bigger mistakes people commonly make: --Not realizing how expensive health care is. Having a serious medical condition without insurance or medical cost-sharing such as Christian Healthcare Ministries (chministries.org) can wipe out your finances for years to come. --Not having disability insurance. Have you ever thought about what would happen if you suddenly couldn’t work because of a health issue or an accident? Don’t count on Social Security disability benefits. It’s tough to qualify and the benefits don’t match most other policies. --Getting divorced. Even after attorney and court fees and the dividing of assets, the financial impact goes on for years. In her book, "The Case for Marriage," author Maggie Gallagher shows that the majority of people who weathered marriage problems were actually happier years later than those who divorced, in addition to being much better off financially. --Day trading stocks and trying to time the market. The stock platform Etoro surveyed day traders and their habits and found that 4 out of 5 of them lose an average of 36% of their invested money over the course of a year. It’s a wonder day traders hang on for so long. It’s probably because day-trading is so much like gambling, which we know can be addicting. Folks forget about their losses and just look for the next big win. Before they know it, they can be in deep financial trouble. So stay away from both day-trading and gambling and your bank account will thank you. Next, Rob turns to our callers and answers the following questions: --I’ve got a pretty sizable amount of money in my retirement account at work and am considering taking about $350,000 out to help us move to a better house. Is there a way to do that without a huge tax hit? --I was able to purchase my current house outright. We’re looking at getting a second house in Florida and are wondering if we should take out a mortgage to pay for that second home? And if so, should the mortgage actually be on the first or the second home? We have enough in savings if we include part of our Emergency Savings to pay off our home. We would probably be left with about two months of expenses in reserve. Is it wise to do this? --We learned that the reason to get out of debt is not just to have more money, but to have more money to give. However, there are so many charitable needs out there. How do I know where the need is greatest? And is it better to give a little to a lot of organizations or to give more to fewer organizations? --I’m eligible to retire from my job. My options are to take a lower annual pension along with a lump sum, or to take a higher annual pension with no lump sum. Is there a Biblical perspective to help me determine the best decision to make? Ask your questions at (800) 525-7000 or email them to [email protected]. Remember that you can connect with a MoneyWise Coach, find books, articles and other helpful resources including the free MoneyWise app on our website MoneyWise.org. Like and Follow us on Facebook at MoneyWise Media for videos and the very latest discussion! Remember that it’s your prayerful and financial support that keeps MoneyWise on the air. Help us continue this outreach by clicking the Donate tab in the app or on our website.