Lisa Simpson
May 31,2010
In: Foreclosures

Eight Wrong Steps Can Hurtle you Down to Financial Chaos

Eight wrong steps can hurtle you down to financial chaos but the steps are paved and alluring. You many not realize you are going the wrong way. Although some sections of the economy seems to be back on rails the unemployment rate has not improved and continues to hover around 9.7%. Many families have been without pay for weeks and others are trying to rebuild their fortunes brick by brick. The situation is grim as it is – it can be compounded further by taking eight wrong steps.

The first step not to take is to raid the 401(K). Let it remain for the future and do not use it as today-money. The previous generations of Americans were given pension by their employers that lasted a lifetime. Today the pension is in the control of the employees and they can see the money out there. Their name is on this account and they feel they can use it. It is foolish however to dip into it. The retirement funds are protected by bankruptcy laws in majority of the states.

The second foolish step would be to walk out on a mortgage that has gone underwater. There are other options. The house can be put under short sale. By walking off the danger remains of being hounded by the lender later on; the fear will remain and so too will the stain on the credit history.

Balances on credit cards should not be ignored. 15% of American household continue to owe over 40% of their income. One should be strict about use of the card.

The fourth big wrong step would be to talk to individuals or firms that talk about consolidating debts without checking on them. It could be a well laid out scam to trip you.

The fifth mistaken step would be to co-sign a loan. It indicates that the loan taker’s position is so shaky that none will grant him or her a loan without a second signature. If that is so, then why should you put out your neck?

High interest payday loans are something to be avoided although 19 million of the citizens have started to take these loans to their own detriment. Recently the numbers have dropped however.

Another dangerous step is to walk into reverse mortgages. It sounds fine on television advertisements but there are hidden fees and other expenses that makes these loans risky.

Last but not least do not submit your tax return without checking and rechecking. The slightest mistake can land you in real trouble with Uncle Sam.

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