People generally like to build castles in the air, however realising much later that these are merely made up of sand and one good flow of the wave destroys everything. However, this realization comes much later, and generally when it’s very late. The way-out however remains that one needs to be judicious while one handles his or her finances and credit. Enlisted below are the common mistakes that people commit while handling money and credit.If you are struggling to make ends meet and consistently find you are paying all of your bills late because you do not have the cash, it may be time to get professional assistance to discuss your finances. The amount of money in late charges along with the possibility of an increased interest rate could make your monthly payments astronomical. If you have the money but just do not stay on top of your accounts, you are basically just tossing your money out of the window. It is nice to know you have the convenience of using credit cards when you need to make a purchase. However, if you are just absently charging without a thought to the pay off, or worse, running up your account balances knowing you cannot pay them off, you could be setting yourself up for financial problems for years to come. If you do not have a solid plan to pay off the total balance within 3 months, stop using your credit cards. If you have a large amount of outstanding debt on credit cards, then consider getting a loan in order to pay it off; it’s worth noting that the APR on loans is normally much lower than that on a credit card.

Living within your means is some of the best financial advice you can ever take. What you cannot afford in cash, you cannot afford. If it is necessary for you to use credit cards to buy groceries, pay utilities, and for other basic needs because you do not have the cash, you are heading for more financial disaster. People often assume that by paying the minimum amount on each credit card or other account, they are doing okay. Not so, the experts say. By paying only the minimum amount each month, your mounting debt can very easily get out of control. Regardless of how much you can save each month; make a plan to at least put something aside for an emergency fund. Every penny will add up and you will be encouraged once you begin the cycle of saving. Once you have a nice cushion of savings, keeping adding but don’t touch unless there is actually an emergency. If you want to start saving now, then Legal and General offer a number of good options with high AERs for savings accounts’ or you can transfer your cash in an ISA too. Consigning a loan or even allowing other people to borrow money from you with no consequence, will hurt you financially.

The loan can lead to credit problems of your own and should the recipient fail to pay back the money, you will be held accountable for the payments. Loaning people cash and not having a concrete plan to get it back is again, just throwing your hard-earned money out of the window.  Being a Financial Ostrich and burying your head in the sand is one of the biggest financial mistakes you can make. If your debt is too overwhelming, ask for assistance to help you get on track and get your finances in order. Until you know how much you owe and what your plan is to get the bills paid, you will only be further steeped in debt.

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Thomas Kerrin is author of this article on ISA. Find more information about unit trusts here.

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