Costly pitfalls can turn people’s lives upside down by creating significant financial strain and emotional stress. Navigating these challenges requires careful financial management, emergency planning, and a focus on building a stable financial foundation to prevent long-term negative impacts.
1. Losing Your Job
Nobody plans on ever losing their job, but sometimes, the unexpected happens. Getting laid off greatly affects your income, but nobody ever plans for it. After all, we misguidedly believe it will never happen to us. But trust me, your life can change in the blink of an eye when your “steady income” is suddenly ripped away! Obviously, an emergency fund is handy in times of unemployment, but that’s another aspect of financial wellness that many people underestimate.
2. Missing a Credit Card Payment
In school, you learn about world history, calculus, and home economics, but you aren’t taught one of the most important life lessons: Paying your credit card payments on time. One of the most severe financial penalties you can face is failing to make the minimum monthly payment on your debt, causing interest rates to spike and your credit score to plummet. For many Americans, missing a credit card payment is catastrophic.
3. Car Loans
If you’re ever applying for an auto loan, always focus on the out-the-door cost of the vehicle you want to buy. The dealership will always push you toward lowering your monthly payment, even if there are better ways to navigate the loan. The longer your loan is, the more you’ll pay in the long run for your vehicle. Don’t fall for the “lower monthly payment” trick because it will cost you far more money in the end.
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4. All Homeowner-Related Expenses
Where do I begin? Owning a home comes with endless potential repairs, from heat and water pumps to air conditioning, flooring, and roof repairs (and everything in between). Although owning a home is a significant life milestone, even the most frugal homeowner confesses that the expenses quickly pile up and easily turn a secure financial situation upside-down.
5. Your Spouse’s Pension Ending
Unfortunately for married people, when one person passes away, their financial benefits cease to exist as well. One woman specializing in finding work for older Americans knows how hard it can be. “I’ve seen firsthand too often when the husband dies, the pension stopped,” one woman attests. “It sucked helping older women find jobs, especially when they had no experience in any job. We had to provide training in soft skills, too, like showing up at an exact time.”
6. Helping Irresponsible Family Members
You can never say no to family, so walking away from a loved one in need is impossible. Having irresponsible family members who need financial assistance strains anyone’s budget, and it’s never something you prepare for. Countless people admit that their financial situation was in great shape before a family member came to them needing financial assistance. While most people are happy to help, sadly, it comes at a price.
7. Daycare Expenses
Having children is expensive, and in 2023, daycare services are astronomically high. My jaw routinely drops to the floor when my friends reveal how much their kids’ daycare bills cost. I don’t want to give specifics, but it often costs the same as their mortgage! I’m not saying anyone should reconsider having children, but if daycare is so expensive, I’m unsure if it’s even worth it.
8. Co-signing a Loan
Unfortunately, nobody warns about the downsides of co-signing a loan enough in 2023. While agreeing to co-sign a loan for another person is admirable, it comes with a significant caveat: You are on the hook for the loan balance if the other person decides they’re no longer paying it. Predictably, this could lead to endless drama between family members and, unfortunately, sometimes leads to lengthy legal battles. Do yourself a favor and never co-sign a loan!
9. Getting a Divorce
Sometimes, lost love can be devastating emotionally and financially. Not many people know the actual cost of getting a divorce. The process is more than lawyer fees and paperwork costs; finding another place to live, purchasing new furniture, and dealing with possible child support payments makes divorce a last resort for many couples. The sad reality is that even though two people may not love each other anymore, staying legally married is often more sensible!
10. Getting a Speeding Ticket
If more people knew how speeding tickets affected their car insurance rates, the roads would be infinitely safer (and slower) environments! I recently received my first-ever speeding ticket, and I’m possibly facing insurance rates that are more than double what I’ve been paying for the last 20 years. I’m going to beg for mercy in traffic court! Regardless of the outcome, I’ve learned my lesson.
Related: 50 Super Simple Side Hustle Ideas
Choosing a side hustle can be fun compared to getting a part-time job because they allow you to pursue what you’re actually interested in, like perhaps fitness or writing, while providing you flexibility!
Read more: 50 Super Simple Side Hustle Ideas (& How to Make Them Work)
Related: 20 Easy Ways to Raise A Credit Score Fast
This rating is one of the most common across the nation, and those who have it know that it creates a variety of lending difficulties. Thankfully, it is possible to improve your bad credit score past this subprime rating and get the loans that you deserve.
Read More: 20 Easy Ways to Raise A Credit Score Fast
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If you’ve enjoyed reading our content and are passionate about learning wealth, managing your finances, and achieving financial freedom, we’d love for you to join our community! Click here to follow Invested Wallet for more.