Bad Habit: Ignoring your credit reports
Each year that goes by in which you have not reviewed your credit reports (one from each of the big three credit bureaus), you become more deeply entrenched in this bad habit.
It’s been estimated that four out of five credit reports have errors. And according to Consumer Reports, consumers find some 13 million inaccuracies each year. If you’re not watching your own credit report for errors, who’s going to do that for you? The answer is simple: No one. You are the only person who cares what’s in your credit report. And you should! Inaccurate information could mean you’re paying higher insurance premiums or an inappropriately high interest rate on a credit card account—and be suffering with a low credit score.
Break the habit: Get out your calendar. Make a note on the first day of March, July and November of each year, reminding yourself to request one of your free credit reports for your own personal review. Federal law says you are entitled to one free credit report each year from each of Experian, Equifax and TransUnion. Spread them out over the year so you can monitor your report once every four months. The only way you can get these free reports, however, is to go through Annual Credit Report. All other avenues will require you to pay, so keep that website address handy. You will be offered other services for a few, but keep saying no thanks and push through to your free reports.
If you find any errors on your credit reports, report them immediately using the dispute process outlined on the back of each of your credit reports.
Bad Habit: Not paying on time
As one born with a very strong procrastination gene, I can attest to the problems associated with this terrible habit of making late payments. While understandable, paying late is not excusable.
The nature of late payments these days ($29 or more per occurrence with most credit card companies, for example) make them particularly horrific. But that’s not all. Many creditors will see one or two late payments as cause for increasing your interest rate. The increased interest together with the late fee can easily send a credit card balance over-limit, which of course kicks in another punitive charge: The over-limit fee of $29 or more per month.
Break the habit: Don’t wait until just a few days before a bill is due to make that payment. If there is any chance you will procrastinate, make the payment on the day the bill arrives. Just do it. Or even better, set up an auto bill payment at the creditor’s website or with your own bank. Even one late payment can put a 7-year black eye on your credit report in addition to the big late-payment fee. The luxury of paying late is simply not worth the torturous response.
Arranging for an automatic payment on bills that carry a late-payment fee provision will give you peace of mind and keep a load of money in your wallet, not your creditor’s account.
Bad Habit: Bouncing the bank account
There was a time that bouncing a check because you have insufficient funds in the bank was at the most, embarrassing. The $5 fee was easily tolerated. Those days are long gone.
Bounce fees have skyrocketed to $35 or more—plus a daily fee from some banks for each day your account remains in the red. Habitually bouncing one’s bank account by use of a debit card, ATM withdrawals or writing a paper check can be devastating. If the bank deems you to be a deadbeat customer, they will close your account and report this to a central clearinghouse. Now you’ll be unable to open a bank account anywhere.
Break the habit: If you’re a bouncer, get thee to the bank! Arrange for a reserve account that will catch you in the event you overdraw again. There will be a small transaction fee, but nothing close to the horrendous “courtesy bounce fees” many banks are charging. Consider your reserve account (it’s like a credit card account) to be insurance you hope you will never have to use. Next, you really have to commit to recording every single debit-card, ATM and paper check transaction in your checkbook register, making certain you calculate a new balance every time. Never allow yourself to come closer than $100 to the end of your money in the account. Reconcile your account each month when the statement arrives.
You cannot afford the high cost of bouncing your checking account and that’s okay, because you won’t have to ever again.
Bad Habit: Keeping money secrets from spouse
This is not the same as having separate accounts. I’m talking about secret debt your beloved does not know about; shopping you do that you try to pass off as stuff you’ve had for a long time (I confess to knowing all the tricks), or laundering money through your grocery tab by getting cash back to spend on secret stuff.
Not only does this habit mess with your financial stability, it erodes that bond of trust that is so necessary for a strong relationship. Like most lies, one money lie requires another and then another. Soon you’re in such a big mess your entire relationship is at risk.
Break the habit: Come clean, ‘fess up. Do the right thing—the thing you would want from him or her if you were the innocent party in this web of deceit: Tell the truth. All of it. As painful as it will be to reveal the complete truth, it won’t get any easier than it is right now. You need to apologize, followed by your plan of repayment and restitution. Your remorse will speak louder than words, but don’t expect a miracle. It will take some time for your spouse to trust you again. But as you are diligent to keep your word and to stop lying in the future, the trust will return. One re-paid dollar at a time.
When tempted to keep money secrets from your spouse, consider how you would feel if roles were reversed and you were the innocent party in this web of deceit. Then do the right thing.
About The Author
We recently shared Mary Hunt’s candid story of how she amassed an epic amount of personal debt over twelve years that took her thirteen years to get out of.
Today, she is an award winning and bestselling author, syndicated columnist, sought-after motivational speaker, and Woman You Should Know, who has created a global platform that is making strides to help men and women battle the epidemic impact of consumer debt.
Mary is the founder of Debt-Proof Living, a highly regarded organization consisting of an interactive website, a monthly newsletter, a daily syndicated column and hundreds of thousands of loyal followers. Now in its twentieth year, DPL is dedicated to its mission to provide hope, help and realistic solutions for individuals who are committed to financially responsible and debt-free living.