Biggest Financial Troubles, Triumphs
Apr 23, 2014 |
Building a financial plan specific to an individual is a road of (hopefully) little failures until success. Everybody makes poor financial decisions; the important part is how well they recover and learn from those mistakes, though.
A recent survey of 1,000 Americans by Money magazine revealed our money highs and lows, including dumbest money moves, biggest financial successes, and what people would do if they won the lottery.
Dumbest money moves
The top answer for biggest money mistake was getting into debt (28%), followed by started saving for retirement too late (13%). However, amazingly, 16% of respondents wouldn’t own up to any financial mistakes.
However, the good news is that people aren’t looking to make the same mistakes over again. If they won the lottery, 22% would put a large amount of the money they won into retirement savings. Only 5% would succumb to temptation and use their lottery money to splurge on a big purchase.
While 38% would look to pay off debt, they might not be differentiating between good and bad debt: 20% of respondents would pay off their mortgage (good debt) and slightly fewer (18%) would pay off credit card debt (bad debt). Mortgages are considered good debt because they usually have lower interest rates and the debt is deductible. However, credit card debt often has high interest rates and the debt is not deductible.
Just be careful how you pay off that debt. The last thing you want to do is take money from savings accounts allocated for other uses, especially if that money is for retirement. Withdrawing funds is the easy part, getting around to replacing the money is a little more difficult.
If you do use the money from a retirement account to pay off debt, then Investopedia recommends continuing to live like you still have a debt to pay, this time to your retirement fund.