What not to do with your money
From that latte addiction to another pair of shoes you just have to have, everyone makes some missteps with their money. But there are some mistakes you should never fall into. Here's what not to do with your money: with interest -- in five years. Remember, you paid taxes on the money you used to pay the loan back and you pay taxes again when you withdraw your account. Plus, tapping into your 401(k) also means you're missing out your money's ability to compound until retirement. If you are faced with high credit card bills or you've been hit with unexpected bills, like an un-reimbursed medical expense or an expensive car repair, consider some alternatives before tapping your 401(k). Remember you can always stop contributing temporarily to your retirement fund. Of course, this will be limiting your ability to make money with compound interest, but it may fatten your paycheck by a hundred dollars or so. You may also consider taking out a home equity line of credit, even though the credit crunch has made it harder to qualify. It's not only 401(k) mistakes that can lead us astray. by late charges or by attorney fees -- if the lender decides to sue to collect. If the lender wins, your wages and property may be taken according to the Federal Trade Commission. If you must co-sign a loan, there are steps you can take to protect yourself. First, ask the lender to send you a written notice if the original borrower misses a payment. That way you'll get a heads-up about any future trouble. You may also be able to negotiate the specific terms of your obligation. For example, you may be able to limit your liability to just the principal on the loan, excluding late charges, court costs or attorney fees. In this case, ask the lender to include a statement in the contract. If you do co-sign, get copies of all the important papers, like the loan contract, the warranties and the Truth-in-Lending Disclosure Statement. You may need these documents in case there is a future dispute. Keep in mind that the lender isn't required to give these documents to you. You may need to ask for copies from the borrower. In the long run, if you really want to help out, consider just giving your friend or family member a cash loan. It's a smarter move that can save you a lot of headaches. |
