Five Common (and Costly) Consumer Money Mistakes

Making money mistakes will quickly dry up your savingsWhile we're doing a lot of things "right" these days (such as paying more attention to our credit card statements, shopping more frugally, and redefining our vision of retirement), we're still making quite a few mistakes. And some of them can be costly -- like these five common consumer mistakes:

1. Not Knowing Our Credit Scores

This is a really important number, looked at by everyone from lenders to landlords and even a growing percentage of employers. In fact, according to the Society for Human Resource Management, as many as 60% of employers now look at this number. And while lenders look at it to gouge your creditworthiness, employers look at it more as a way to check your character. They need to know that you're responsible with your finances, and that you're going to focus on your job, not your financial woes.2. Not Knowing How to Boost Our Scores

While there are a number of factors that make up our credit scores, the two most important are payment history (it accounts for 35%), and amounts owed (30%), so the easiest way to boost this all-important number is to pay your bills on time and watch the credit card spending, using no more than 30% of your available credit, and ideally, just 10%. Check out WalletPop's series on living a debt-free life (and boosting your credit score) with David Bach for more information on this important topic.

3. Trying to Time the Market

While it's never a good idea to time any market, let's talk housing here. Buyers are sitting in the sidelines, waiting for prices to bottom. Remember: prices are just ONE factor in how much a home will cost per month. Mortgage rates are the other, and they're rising. In fact, even if home prices drop another 5%-7% (as many economists expect them to), higher mortgage rates could counteract that.

4. Not Researching Loan Options

A survey by Zillow Mortgage Marketplace shows that borrowers are spending twice as much time researching a car purchase as they are home loans -- five hours versus 10, respectively -- even though the average cost of a home is about five times more than the average cost of a car. A home if the largest investment you're ever going to make; not researching loan options and getting quotes can cost you thousands of dollars over the life of the loan. Check out WalletPop's coverage of how best to search for a home loan online here.

5. Relying on Retirement "Crutches"

This point is directed toward women. We're way too reliant on our husbands (one in four of us are relying on their pensions to get us through old age, according to Prudential), Social Security, our inheritance, and yes, even our family and friends -- Six out of 10 of us rely on them for financial advice because even though we have a basic understanding of workplace retirement accounts, things like annuities and mutual funds elude us. Ladies, consider hiring a professional. Or read more of WalletPop's coverage of women and retirement here.
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