Preferred Financial Services

Andover, Massachusetts August 16^th, 2010 – The recent recession has brought a new spotlight on personal finance and more specifically the mistakes that have been made by millions nationwide. Every family and individual in this country has some “fat” that can be cut from their everyday lives that would improve their financial situation over time. Not only is there a lot of money being wasted but many Americans never even learned what the wrong moves were when it came to personal finance. Preferred Financial Services, in an ongoing quest to educate their clients and the public on personal finance has compiled this list of mistakes that are being made everyday without much fanfare….

1. Monthly Payments = I can Afford it : Ever go into a furniture store or car showroom and noticed that the actual retail price is not the number that is emphasized  but instead the monthly payment? This is because retailers know that they can make a lot more money if they allow consumers to purchase goods on credit over time. A car dealer would rather sell you a car for $30,000 today and make $35,000 after 5 years of payment than just having you pay cash for it. Interest, finance charges, and other fees all add more money into their pocket and less into yours. Not only that, but basing your budget on monthly payments almost guarantees that you will purchase more than you should. Credit cards and payment plans have allowed millions of Americans to get expensive goods now without paying for them in full. The result is the recession we are in now. All it takes is one jobless or illness to force you into a situation where you cant afford to make your payments on all the items you purchased on credit. The fix? If at all possible wait to purchase large consumer goods until you can do so in cash. It will help your pocketbook and give you time to really figure out if you need that new 50 inch TV.
2. Paying to Much on your Mortgage: For most Americans their home mortgage is the largest liability they will ever have in their lives. Typically housing expenses can consumer up to 40% of ones income every month so it is important to get the most bang for buck in this department. Your monthly payment is determined by your length and interest rate associated with the mortgage. Lets take a look at a basic example. A $200,000 mortgage at 5% for 30 years would leave you with a $1073 payment per month. If that rate was 4%, it would only be $954. Multiply that by 360 months and the difference between the two is a stunning $42,840. What could you do with over $40,000? Probably something better than paying it in interest to your bank.
3. Not Paying the Right Amount of Taxes: There is one constant in life even in these tough times and that is taxes. Every working American has to pay their taxes each year, so why not make sure that you pay the lowest amount possible. This isn’t a tip about fudging your numbers or cheating the system but simply about making sure that the correct amount is withheld from your paycheck each pay period. Many Americans look forward to a huge tax refund check each year but this is in fact the opposite of what they should be looking for. A refund means that you have paid too much each pay period and thus the government needs to refund the money. But this refund does not include interest on that money, so in essence, you have loaned the federal government your money at 0% interest. Ideally you would try to get the smallest refund check possible each and every year.
4. Minimum Monthly Payments on your Credit Cards: The most obvious mistake but also the hardest to break if you are currently paying the minimum. For most Americans this isn’t a choice but a requirement because their balances are so high they can’t afford to pay much more than the minimum. If this is you, make sure you are taking the steps necessary to eventually being debt free, whether this means tightening your budget or enrolling in a debt relief program such as those offered by Preferred Financial Services. If you are doing this by choice or ignorance then stop immediately. Even low interest credit cards are more mostly than taking out a personal loan from a bank or credit union. To make sure you never pay another dime more than you should follow the number one rule to being debt free, don’t spend more than you can pay each month! Carrying a card with a zero balance will allow you to fulfill your other dreams and goals without having to worry about making next months payment.

Readers, are you currently making any of these mistakes or have you in the past? What tips do you have for those that can’t seem to find a way out of their financial mess?

Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.

For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .

Contact:

Stephan Tavernini

Marketing Coordinator

Certified IAPDA Debt Arbitrator

Preferred Financial Services

stavernini@pfs1.net

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