Everyday Cheapskate: Recover From Dumb Financial Mistakes
When I was young and stupid, I accumulated more than $100,000 in credit card and other non-mortgage debt. I didn't get into that mess overnight. It took 12 years and many financial mistakes along the way to nearly ruin my life.
During the 13 years it took to get out of the mess, I learned how important it is to deal with mistakes as they happen so they don't turn into major setbacks.
No one is perfect. You're going to make mistakes, and when you do, you need to know how to react and what to do to minimize the damage.
Undo it. You may be able to cancel the agreement or return the purchase for a refund. Move quickly to make every reasonable attempt to get out of it.
Learn from it. Rather than burying yourself in guilt, take a look at what went wrong. Making a mistake is understandable. Repeating it is not.
Financial mistakes come in all sizes, from a bounced check to a whopping mortgage. These are the big mistakes I hear about most often:
MONSTER AUTO LOAN
All you really wanted was an oil change. Instead you left in a brand-new $58,000 luxury car with 72 monthly payments, or worse, a lease. How will you ever make $800 payments?
Whether you've made payments for a few months or a couple of years, it's likely the car is worth less than the amount you owe. That complicates matters. Still, you may have options.
Refinance: Interest rates are likely to be lower now than when you signed that monster loan. If your car is a late model with fewer than 80,000 miles, you should be able to refinance at a lower rate. Call your credit union or bank, or apply online at sites like Capital One and rateGenius.