Financial Advice

Struggling to keep up with student loan repayment

Oct 20 2015

We’ve all heard the stories. Whether from our friends, colleagues, adult children, or through our own experiences, we know that student loan debt is taking a huge toll on students and graduates across the country. With the total volume of outstanding student debt amounting to well over a trillion dollars, we’ve heard stories of its impact on home buying, saving, the start of new businesses, new families, and more.

This summer, we had the pleasure of meeting Dani who shared her story with us. Her story was similar to many of the stories we receive on student debt. Dani, who graduated with a degree in elementary education, wasn’t making a lot of money. She was struggling to make ends meet and pay down her student loans. She was living in a family member’s basement located over an hour away from her job, driving a car in desperate need of repair, and trying to balance the cost of groceries against her student loan payments. At one point, she could not pay her student loans and received threatening calls as a result.

“I can’t even tell you the number of times I’ve cried over my finances… It’s not like I’m going out and saying, ’Oh, I don’t have to pay those.’ I want to, and it’s really hard to deal with not being able to.”

Dani was on a one-year reduced payment plan, but it was about to expire. She knew that her income still wasn’t enough to manage a full student loan payment so, before the reduced payment plan expired, she contacted her student loan servicer to find out what steps she needed to take to stay on the plan. Although they assured her that she’d be able to do so, her request to extend the plan was eventually denied. Dani continued to try to work with her student loan servicer but she was getting nowhere.

“I needed help. I contacted the CFPB because I really needed someone else on my side. There’s nothing that I was doing with this private student loan servicer that was changing anything, and I was stuck in a position that felt hopeless…”

The loan servicer reviewed her account and determined she was indeed eligible to stay on the reduced payment plan for another year. By reaching out to the CFPB, Dani was able to take charge of her student loan debt.

“It’s such a relief to be able to not have to worry about if I’ll have money for gas to get to work; or, not have to worry about whether or not I’ll have something to eat that week; or being able to afford a place to live.”

We’re glad that Dani got the help she needed by reaching out to the CFPB. Whether you’re struggling with student loans or planning how you’ll pay for college, we have tools to help you. You have the right to take charge of your student loan debt, so let us help you along the way.

To learn more about our recent work to help student loan borrowers, read our report on Student Loan Servicing.

Check out more stories from people like you, visit our Paying for College tool, and submit a complaint if you’re having a problem with your student loan.

This article by Ashley Gordon was distributed by the Personal Finance Syndication Network.

Financial Advice

Helping financial caregivers in every state

Oct 19 2015

Helping financial caregivers in every state

Millions of Americans are managing money or property for a family member or friend who is unable to pay bills or make financial decisions. We’ve heard from these financial caregivers about how tough it can be.

Kristin in Virginia had to take over financial management for her 35-year-old brother when he suffered a traumatic brain injury in a devastating car wreck. “Taking over financial caregiving for my brother was especially challenging when coupled with the physical and emotional trauma of his accident. Even though I’m a financially savvy individual, I had no idea where to get help…. Unfortunately, there was no guide, no checklist, or a book of best practices to refer to.”

In Florida, Hector stepped in to help his elderly mother after a niece stole nearly $100,000 from her. Despite his own severe disability, he works every day to make sure her nursing home bills are paid and her accounts are in order. “When you have to take care of someone else’s finances, you feel more responsible for their affairs than you do for your own. It’s overwhelming.”

Managing Someone Else’s Money

We listened to consumers about the need for easy-to-understand tools to help manage a loved one’s money. Two years ago we released the Managing Someone Else’s Money guides for financial caregivers all over the country, and we’ve distributed over 600,000 printed copies so far. The guides are for:

  • Agents under a power of attorney
  • Court-appointed guardians of property and conservators
  • Trustees
  • Government-benefit fiduciaries (Social Security representative payees and VA fiduciaries).

The guides help financial caregivers in three ways: they walk them through their duties, they tell them about protecting their loved ones from financial exploitation and scams, and they tell them where to go for help.

But, because people’s powers and duties overseeing another person’s finances vary from state to state, we’ve learned that people need more than a one-size-fits-all guide. That’s why we are releasing specially adapted guides for six states. We’ve already launched guides for Florida and Virginia, and soon will release guides to help financial caregivers in Arizona, Georgia, Illinois and Oregon.

But, what about the other 44 states and the territories?

Today we are releasing new tools to help experts in other states adapt the CFPB’s guides. These tips and templates are meant for key state professionals to develop guides for states that don’t have them. (If you are wondering who a key state professional is, check out tip 2, in the tips document.) Our tips and templates will make it easy for experts to create state guides with specific information that financial caregivers need to know. The tips tool explains how to adapt the guides in ten easy steps. The templates highlight the parts of our guides where experts can add information about your state’s laws, practices and resources.

The tips and templates are available for download on . If you would like free print copies of the tips document, you can order single copies or place bulk orders .

Let’s work together to meet the needs of people like Kristin and Hector in your community.

This article by Naomi Karp was distributed by the Personal Finance Syndication Network.

Financial Advice

The teenage years are for practicing money decisions in a safe space

Oct 16 2015


Previously, in our series about how children develop the skills and habits that support financial well-being in adulthood, we shared a few stories from parents. We illustrated how childhood is the time to acquire skills like self-control and planning ahead, and the preteen years are about getting familiar with the financial world around us. In this last part in the series, we’re going to explore how teenagers practice the financial skills that drive their choices in adulthood.

Teenagers can learn about personal finance through classroom courses and through real-world experiences. According to research we commissioned, well-designed classes or programs support the financial decisions teens face in their lives: how to identify facts they need, decide what information sources are reliable, and compare alternatives. Additionally, lessons can have staying power when the teenagers already use the products they’re learning about—like bank accounts.

At home, when teenagers make their own money decisions, these experiences can help make lessons learned stick. We want to share two stories we heard about teens’ experiences.

The teen who saved money by making his own lunch

As teens start to work, and earn and spend their own money, they experience firsthand the costs and value of things they buy. The idea of making tradeoffs takes a concrete shape.

When my son Kyle was 16, he had a summer job. The first week, he bought fast food every day for lunch. Then he did the math – the $7 he spent on lunch the first week added up to $35! Kyle asked me to buy him some groceries so he could bring his own lunch. He made his lunch almost every day for the rest of the summer and he was happy he could save $35 a week.

Kyle’s parent noticed how Kyle started out with one plan for his lunch and then changed his mind, after seeing how much he was spending. When Kyle asked for support, the parent helped him stick to his plan so he could see the savings add up.

You can also look for opportunities to empower your teenager to meet his or her own needs, as the following parent did.

The teen who earned her extra clothes

My daughter Maria and I were planning to visit the college where she would study the following fall.
I told her I would buy her only one sweatshirt—and I knew she would want to buy several. Two weeks before our visit, a friend asked me if I knew of a good dog sitter for a week and I said my daughter could do it. Maria earned $130, so when we went to the college, she was able to buy what she wanted. I was really proud of the way she took responsibility for the dog and didn’t complain about the work. I think it empowered her to know that she can work to earn money for the extra things she wants.

Maria’s parent helped her gain an opportunity to earn money for something she really wanted and to exercise her ability to make her own, independent spending decisions.

Experience helps teens develop financial confidence

Hands-on experiences with managing finances help to promote teens’ self-confidence and belief in their own ability to succeed. This is one of the key drivers for financial well-being in adulthood.

An important part of teenagers’ development is taking the time to process and reflect on their money decisions—so they can learn from successful choices as well as mistakes. Whether a teen is learning from a class or afterschool program, a first job, or a decision he or she has made, parents and caregivers can act as sounding boards. As they do for younger children, parents and caregivers continue to play an important role in facilitating behaviors in teens that lead to their financial well-being in adulthood.

For more ideas on teaching your kids about money, check out our resources for parents.

The names in this blog have been changed to protect the privacy of those involved.

This article by Laura Schlachtmeyer was distributed by the Personal Finance Syndication Network.

Financial Advice

Student Debt Remains Part of Economic Instability

After four years of university study and several more for a second or third degree, students are left with tremendous debt and a big hole in their pockets. Despite attempts to stay within a budget, find secure employment and start a payback plan, graduates find themselves stuck in the mire of financial obligations and bank loans.

Not all graduates face the same fate and the type of degree can determine the ease of finding proper employment as well as the salary associated with it. For example, many educators today view a humanities degree as practically useless when it comes to procuring a job with any semblance of sufficient income and specialty degrees such as those in the medical, dental or engineering fields require extra years of study and hence additional loans.

According to an article published in The Atlantic in March 2014, even those who continue on with their studies and obtain humanities Ph.D.s have job prospects no better than those who end their studies earlier. In the Atlantic article, English professor William Pannapacker suggested that a humanities Ph.D. “will place you at a disadvantage competing against 22-year-olds for entry-level jobs that barely require a high-school diploma.” Pannapacker went on to advise would-be graduate students to recognize that a humanities Ph.D is now a worthless degree and they should avoid going into further debt in order to acquire one.

Andrew Green, associate director at the Career Center at the University of California, Berkeley has a different take on the situation. He admits that there is no doubt that humanities doctorates have struggled with their employment prospects, but he points to less widely known data showing that between a fifth and a quarter of these doctorates go on to work in well-paying jobs in media, corporate America, non-profits, and government.
Paula Chambers, founder of Versatile Ph.D., a service that prepares graduate students for the non-academic job market, takes a positive view of the employment situation for humanities graduates. Chambers points to humanities Ph.D.s in many industries far removed from academia such as a Ph.D. in Greek and Roman history who landed a marketing job at a wine estate, a Ph.D. in British history who is now a branch chief at the National Parks Service or a Ph.D. in Classics exerting influence as a director at a hedge fund.
But were these the goals set by humanity students when they started their graduate education? How long will it take them to repay the loans they incurred in order to reach the academic level they did?

When it comes to graduates in other disciplines, the numbers aren’t much better. According to a research study conducted by UK specialist insurer, Endsleigh and reported in England’s Guardian in August 2014, only 34% of the then recent graduates had found full-time work in the career of their choice.

The vast majority of graduates do, eventually, find work, but often it is in a different field to their degree. According to Higher Education Statistical Agency figures for 2012-2013, only 8% of the students surveyed were unemployed six months after leaving university. But how much were they earning? The Endsleigh survey found that almost half (48%) of them said their current wage was lower than expected, with 57% currently earning £15,999 or less with the average salary around £20,000. Certainly not enough to pay back all the debts accrued over the years of study.

One of the solutions to the debt-study dilemma that has proven successful but which may not be appropriate for everyone is to work while attending school. Both small and large corporations are eager to employ students who will agree to a lower salary while attending classes towards their degree. On some levels it is a win-win situation. The student gains work experience and has some income towards his/her studies while the hiring firm pays less for a worker who, at the end the tenure, may well prove appropriate to the position and be taken on as a permanent member of the staff without the need of retraining for the job.

In the above situation, although there no guarantee of employment upon completion of the student’s degree, at least an accumulated debt of untold proportions has been avoided.
The most obvious direction to choose for avoiding education loans is simply to postpone studies altogether until the money is there. But this is a catch-22. No education, no job. No job, no money. What is a student to do?

The problem of student debt is growing. Here are the statistics according to a report posted on CNBC in June, 2015, and the numbers are staggering: There is more than $1.2 trillion in outstanding student loan debt, 40 million borrowers and an average balance of $29,000. The high levels are serving to perpetuate or even worsen economic inequality and are undercutting the opportunity and social mobility that higher education should provide.

Perhaps one way to avoid the debt altogether would be for students to plan to put away a small amount of money on a steady basis as soon as they are able and to learn how to invest their money early on in their lives. Opening an investment account with a good broker can be done at any age with the approval of an adult and as an individual from the age of 18. Investing can also be fun but learning to do it properly requires at least the minimum of training and education.

With today’s precarious global financial situation accelerating, it appears that the question of student debt and its repercussions remains a large part of the economic equation.

This article by Cina Coren first appeared on and was distributed by the Personal Finance Syndication Network.

Financial Advice

New signs of trouble for student loan borrowers

Oct 14 2015

Earlier this year, we asked you to share your stories about student debt stress. More than 30,000 of you responded, telling us that student loan servicers (the companies that send you a bill each month) can make it harder to manage your loans and may contribute to our nation’s growing student loan default problem.

Last week, we published a report based on your stories and issued a call for industrywide reforms to protect consumers.

Building on this work, today, we released our annual report on student loan complaints , taking a closer look at the problems experienced by certain student loan borrowers. We are particularly concerned about repayment problems facing those with older federal student loans that were made by banks and other private lenders. We found that servicing issues may make repaying student debt even harder for this group of borrowers, in particular.

Federal student loan borrowers may have loans made directly by the Department of Education (Direct Loans) or loans made by a private lender. Most federal student loans were made by private lenders until 2010 when the program (known as the Federal Family Education Loan Program or FFELP) was ended. These loans were once the most common way to borrow for college and borrowers with these loans still make up nearly a third of all student loan borrowers— owing more than $370 billion in outstanding debt.

Today’s report found that federal student loans made by private lenders may have a greater rate of borrowers in default and delinquency than the broader student loan market. This raises concerns about whether distressed borrowers with these loans are getting adequate information on repayment options from their servicers.

In fact, while the CFPB estimates that more than one-in-four student loan borrowers are delinquent or in default market-wide, today’s report reveals that at least 30 percent of FFELP borrowers—more than five million in total— are behind on their loans or are already in default. As one FFELP borrower told us:

“I have a loan with [servicer] and I have not been given any help dealing with my payment options. I have filled out applications for an [income-based repayment plan] and forbearance. Customer service is constantly giving me false information and not helping me to get my payments lowered…Please, help me. I am trying hard not to allow my loans to go into default. I am not trying to ignore my loans but how can I pay a $2,000 monthly payment. They are not helping me to resolve this payment to a payment that I can afford.”

Today’s report also notes:

  • Borrowers with federal loans made by private lenders report that they run into roadblocks when trying to access income-driven repayment plans, despite the right under federal law to do so. Borrowers with these loans generally have a right to enroll in payment plans that set their monthly payment based on their income. The complaints we received show that some student loan borrowers had trouble getting accurate information, having paperwork processed on time and staying on track once they were able to enroll. These problems can increase costs for borrowers and may contribute to driving some borrowers into default.
  • More than 1-in-5 of these borrowers are past-due or are not making payments, but are not yet in default. We also asked some of the largest student loan companies to share information about how their customers with these loans are doing. We looked at a sample of this data and found that more than 12 percent of these borrowers are behind and more than 10 percent are in forbearance (asking their servicer to let them take a break from making payments)—potentially signs of significant distress. We also know that more than four million borrowers with these loans are already in default, based on data published by the Department of Education.
  • Ninety-five percent of these borrowers are not enrolled in income-driven repayment plans. For the first time, today’s report sheds light on how many of these borrowers are enrolled in income-driven repayment plans. We found that, despite the widespread availability of these plans, the overwhelming majority of borrowers in our sample were not enrolled. This is particularly concerning given that borrowers in the standard monthly payment plan default on their loans at nearly five times the rate of borrowers who enrolled in income-based repayment, by one recent estimate.

Continuing signs of student debt stress among borrowers with federal loans made by private lenders is cause for concern. There remain many unanswered questions about how these borrowers fare over time, in part because there is very little public information available about the performance of federal loans made by private lenders.

Today’s report also calls for better information about the entire student loan market, including more details about delinquencies, defaults, and how borrowers in income-driven payment plans fare over time. It also shows why last week’s call to establish clear and consistent industry-wide standards is an important part of the Bureau’s ongoing work to help make sure student loan borrowers are treated fairly.

If you have questions about repaying your student loans, check out our Repay Student Debt feature of Paying for College to find out how you can tackle your student loan debt.

If you have a problem with your student loan, you can submit a complaint online or call us at (855) 411-2372.

This article by Seth Frotman was distributed by the Personal Finance Syndication Network.

Financial Advice

Here’s how coaching can help you meet your financial goals

Oct 9 2015

Here’s how coaching can help you meet your financial goals graphic

We talked to people across the country about financial well-being and what it means to them. Many people told us that financial well-being means:

  • Feeling in control of day-to-day finances.
  • Having a safety net to help stop a financial shock from turning into a long-lasting setback, and
  • Staying on track to meet financial goals while also having the freedom to enjoy life, which means different things to different people. For some that means taking a vacation, for others it’s about going out to eat, and for others it could mean working less to spend more time with family.

At the CFPB, we believe all consumers have the right to achieve greater financial wellbeing for themselves and their families. That’s why we’ve studied a promising approach to financial education: financial coaching.

How financial coaching helps consumers

Earlier this week, the Urban Institute released a study we commissioned, which found that financial coaching can help increase financial well-being.

The study analyzed two different coaching programs serving low and moderate-income consumers – Branches, a faith-based social services organization in Miami and the Financial Clinic, a non-profit financial services organization in New York City. Financial coaching is customized to meet each person’s goals, and the study found that coaches can help people achieve financial outcomes that are most relevant to their own situation. The study showed that on average, people offered access to financial coaching:

  • Increased savings by almost $1,200 in New York City
  • Reduced debt by over $10,000 in Miami
  • Increased credit scores by 21 points in New York City
  • Were more likely to pay bills on time
  • Reported an increased sense of confidence in their finances and reduced feelings of financial stress

Check out the study here to learn more about these financial coaching programs and how they serve consumers.

So, what does a financial coach do?

Financial coaches can help you address concerns by assisting you in defining your own personal financial goals as well as the steps you need to take to meet your goals. Financial coaches usually meet with clients one-on-one, and can help you:

  • Determine and define your financial goals
  • Develop concrete plans to meet those goals
  • Provide support over time as you work toward your goals

Our financial coaching initiative

The CFPB has a financial coaching initiative that provides guidance to recently-transitioned veterans and vulnerable families in places where they’re already going for assistance. We’ve joined forces with the Department of Labor (DOL) and more than two dozen non-profit social-services providers to place certified coaches in DOL American Job Centers and community-centered non-profits across the country.

This article by Janneke Ratcliffe was distributed by the Personal Finance Syndication Network.

Financial Advice

25 Worst Financial Mistakes Anyone Can Make

worst financial mistakesAnyone can make a mistake. They’re part of everyday life. Financial mistakes, however, can lead to problems for years to come if not corrected soon.

After talking to financial experts and others who have either experienced or seen other people make the worst financial mistakes of their lives, we compiled the following list of 25 of them. Many are common after graduating from college and starting a financial life on your own, but they can still happen to anyone at any age.

We should also note that these worst financial mistakes aren’t listed in any order. We’ll leave measuring their importance to you:

25 Worst Financial Mistakes

1. Not going to college

The average starting salary for a high school graduate is about $28,000. That figure almost doubles to $48,127 for college graduates in the class of 2014 with bachelor’s degrees, according to a salary survey by National Association of Colleges and Employers. Starting your working life by being that far behind in pay is one of the worst financial mistakes you can make.

2. Not paying off student loans fast

The average student loan debt for a college graduate is $28,400, according to the Institute for College Access and Success.

For a college grad who is earning some real money after four or more years of living like a student, it can be tempting to spend much of their new income before paying off debt. That’s one of the worst financial mistakes a graduate can make, says Alfred Poor, a college speaker and author of books about problems young people are having in the workplace.

“If college graduates tighten their belts and lower their expectations, and live like they only have the high school diploma, they will rapidly pay off their average $27,000 in student loans,” Poor says. “If they spend their whole salary on a more comfortable lifestyle, they could be struggling to pay off that debt for decades, and end up paying much more in interest.”

3. Paying off student loans too quickly

Paying off student loans quickly can also have a downside, says Steven Fox, a financial planner in San Diego with If they use all of their extra income paying off student loans, they could be in financial trouble if they don’t put some in an emergency fund and lose their job or get in a car accident and have unexpected medical expenses, Fox says.

“They should really think about whether they should pay off their student loans as fast as they possibly can once they get their first job if it means that they’re doing so at the expense of not saving or investing anything,” he says. “Ending up with zero debt is good, but ending up with zero savings is very bad.”

An emergency could lead to borrowing money at a higher rate than what they were paying on student loans, says Fox, who reminds graduates that student loan interest is tax deductible for up to $2,500 for individuals making $80,000 or less without having to itemize.

4. Using max credit card limit

“Just because a bank offers you a credit card that allows you to spend money doesn’t mean you should,” Fox says.

This goes for all debt, he says. Being approved for a $20,000 auto loan doesn’t mean your budget for a car is $20,000.

“That money needs to be repaid,” Fox says, “and you are paying a very high cost to borrow it at this stage in life. Spending should be determined by a well thought out budget, not by the size of the line of credit.”

5. Living beyond your means with credit

Building an expensive lifestyle for yourself early in life is possible with credit cards, and is one of the worst financial mistakes anyone can make, says Matt Becker, a fee-only financial planner and founder of Mom and Dad Money.

“That debt will make it a lot harder to pursue exciting opportunities later on, and may even force you to stay in a job you hate just so you can make the payments,” Becker says.

6. Not having health insurance

Young people may think they’re invincible, but unexpected tragedies like a car accident can happen, causing a large financial setback early in life and leading to financial mistakes, Fox says.

Health insurance options for college-age students include staying on their parents’ health insurance until age 26, signing up for their school’s health program, or buying low-cost catastrophic coverage from commercial carriers.

7. Choosing money over mission

We all want to make money, and it’s hard to tell someone to turn down a bigger paycheck, Becker says.

“But you will find much more fulfillment from a job with a mission you believe in than one that simply pays a lot,” he says. “Make sure you’re paid what you’re worth, but don’t forget to make your work meaningful.”

8. Waiting to invest

After spending your first paycheck on something fun, set aside part of your next paycheck for investing, Becker recommends.

“The sooner you start investing, the sooner you’ll be able to say goodbye to that job forever,” he says. “And if your employer offers a 401(k) match, contribute at least enough to get that full match. That’s free money!”

9. Paying credit card bill late

Not making credit card payments on time can be one of the worst financial mistakes anyone can make, says Peter Creedon, chief executive officer at Crystal Brook Advisors.

Credit card companies can bump up interest rates to as high as 36 percent to late-paying customers, Creedon says. Pay your credit card bills in full each month to avoid interest charges.

10. Consolidating credit card balances

Know how your credit card company is going to categorize how your credit card balance consolidation is rolled over, otherwise you might be in for one of the worst financial mistakes ever, Creedon recommends.

“Some companies consider it a cash advance and assessed a slightly higher interest rate and put the amount behind the cards’ balance so the amount takes longer to pay off,” he says.

Develop a cash reserve of at least three months so you won’t have to take on more credit card debt, he says. “Become the bank and pay yourself instead of paying everyone else,” Creedon says.

11. Not asking your parents to cosign a loan

Many young people don’t have a long enough credit history to qualify for a car loan or first home purchase on their own, leading to one of the bigger financial mistakes, says Danna Jacobs, founding partner at Legacy Care Wealth.

Financially strong, mature young professionals with good relationships with their parents should avoid one of the worst financial mistakes in life by not asking their parents to cosign a loan because they want to maintain their independence, Jacobs says. Without their parents as cosigners, they’re missing out on an opportunity, she says, noting that only “financially strong, mature, young professionals” should do this.

12. Not asking for a raise early

worst financial mistakes
Not asking for a raise, promotion or increased responsibility because you only have a short tenure at a firm is one of the worst financial mistakes you can make, Jacobs says.

“You may not get it this time, but when coupled with strong performance, it can increase the rate at which you would be bumped up to the next level,” she says.

13. Not recognizing investment bubbles

Figuring out when to enter and exit the stock market is something even experts have difficulty doing. Guy Smith, a marketing consultant in San Jose, Calif., says among the worst financial mistakes to make, his was not recognizing investment bubbles and therefore cheating himself out of an early retirement.

“I remember the Christmas before the (tech) bubble burst, my Uncle Bob said he had sold all his stock,” Smith says. “He being a savvy businessman, I wanted to know why he bailed. His advice was simple: ‘When you see a lot of people doing a stupid thing, run the other way.’ Had I exited when Uncle Bob did, I would have had $100,000 in cash in my pocket.”

Smith also didn’t act on the housing bubble. He bought a rental home in Florida for $100,000 that doubled in value seven years later. His long-term strategy for the house was to own a home paid for by someone else, so he held on to it. The value dropped and he didn’t sell at the peak for a $100,000 profit.

14. Buying new

Everything depreciates, especially cars, says Rick Sellano, owner of the writing service My Ink Shines. Buying new is one of the worst financial mistakes anyone can make, Sellano says.

He recommends buying used cars with low mileage, gently used furniture and other used items to save money throughout your life.

15. Focusing only on the present

Among the worst financial mistakes to make in life, focusing exclusively on the present is the worst, says John Vespasian, the author of seven books about rational living.

“If you fail to think long-term, you will render yourself blind to the best opportunities,” Vespasian says. “You will waste your money on foolish purchases. You will destroy your motivation to learn complex subjects. And you will surround yourself with the kind of people who are also incapable of thinking long-term.”

“People who focus exclusively on the short term tend to make incredibly stupid financial decisions,” he says. “In doing so, they subject themselves to high stress and anxiety that could have been easily avoided. A man who lacks a long-term perspective in his life will never be able to save money consistently, nor to spend it wisely.”

“Our society places a disproportionate emphasis on purchase that delivery little or zero long-term value. Few people take the trouble to acquire the discipline to think in terms of a lifetime. If you can see yourself living to become 100 years old, and realize what that means in terms of financial foresight, you will avoid making foolish financial mistakes.”

16. Focusing on monthly car payment

A common sales tactic at car dealerships is to get buyers to a monthly payment they’re comfortable with. Many buyers go in with a set amount they’d like to pay every month, and are happy to share that figure with the salesperson, says Jeannine Fallon, executive director of corporate communications at That can lead to one of the worst financial mistakes they can make as a car shopper, according to

“When you do that, you’re not actually talking about the total price of the car,” says senior consumer advice editor Phil Reed. “You also need to take into consideration the interest rate, as well as the length of the loan.”

The dealer may suggest a longer loan so the car fits in your budget, but a longer loan also means you pay more in interest.

17. Not having renter’s insurance

Focusing on the present, however, can be important. Not having renter’s insurance was one of the worst financial mistakes that Eric Narcisco, CEO of, made when he was young.

“After college, when I was living in an apartment in Jersey City, I came home from work one day to find everything I owned lost to a fire that my neighbor had started,” Narcisco says. “I didn’t have much at the time, but since I was just out of college I didn’t have much money to replace those things, either.

“I had convinced myself that I didn’t need renters insurance because I didn’t own anything to speak of. If a policy had been in force, I would have been able to replace all of those things quickly and move on with my life instead of spending years in the process just to get back to where I had already been.”

18. Not saving for retirement early

Layton Cox, a financial advisor at My Pathway in Tucson, AZ, says one of the worst financial mistakes someone can make is not saving for retirement earlier in life. It’s the top regret and one of the many financial mistakes Cox says he hears from people over age 45.

Saving $2,400 annually at age 25 with an 8 percent return will result in more than $52,000 saved at age 65 — 20 times what was originally saved, he says.

Waiting just 10 years longer to “get your life together” will grow that same $2,400 to a little more than $24,000 at age 65. That’s half of what you would’ve saved at age 25, but still 10 times what was originally saved.

“The problem is, most people don’t save for retirement until they are in their late 30s to early 40s,” Cox says. “In their 20s, they save for a downpayment, vacation, or they are too busy paying off student loan debt. In their early 30s, they are saving for a bigger house or children’s education.

“It’s not until the kids are about to leave the house that most Americans save for retirement. This ruins their chance of benefiting from compounding interest.”

19. Taking on more risk than you can afford

worst financial mistakes

As Bernard Kliban once wrote, “Never Eat Anything Bigger Than Your Head,” which is good advice for investors in terms of risk, says Jim Pearce, CIO of Baton Investing in Falls Church, VA.

Don’t trade options, buy penny stocks, or speculate in commodities unless you really can afford to lose every penny, Pearce says of financial mistakes to make when investing.

“Too many investors try to play ‘catch up ball’ by engaging in reckless investing that usually ends up in a wreck, putting them even further behind the eight ball,” he says.

20. Mimic other investors

This is partly in contrast to #13, but mimicking someone else’s investment strategy can be one of the biggest financial mistakes of your life, Pearce says.

“For some reason most people seem to think that anyone else’s judgment is better than their own, so there is a tendency to blindly duplicate what another person tells you they are doing in the market,” he says.

That leads to two problems: (1) they may be lying and only telling you that to impress you, and (2) even if they really are doing that, they may have no idea why they are doing it, either (or doing the same thing you are, and copying someone else).

21. Investing with a friend

Investing in a friend’s or family member’s business opportunity is one of the worst financial mistakes anyone can make, Pearce says. “It’s human nature to want to help the people you care about, but giving them your hard-earned money to capitalize their high-risk business venture isn’t the best way to do it,” he says.

Instead, offer to provide them with a low/no-rent housing situation (if you have the space) so they can live on very little income until their business gets going, or hook them up with someone else who really is in the business of in investing in high risk ventures, Pearce recommends.

22. Pyramiding profits

When an investment is going good we tend to think it will go on forever, so we sink even more money into it, Pearce says. This is sort of like betting double or nothing until you inevitably lose. Instead, set a limit on how much money you are willing to risk on any one thing and stick to it, which could help avoid this and other financial mistakes.

23. Allowing money drains

It’s OK to reward yourself with the occasional night out on the town or well-earned vacation, Pearce says. Those sorts of things don’t help your balance sheet, but provide psychic wealth.

“However, engaging in potentially costly behaviors such as gambling, substance abuse, or simply buying things you don’t really need create ‘money drains’ that rob you of the opportunity cost of putting that cash to better use in something that has value and can sustain you later in life when you really need it,” he says of financial mistakes.

24. Not paying taxes

One of the worst financial mistakes someone can make is not paying income taxes, says Nicole Erwin, a licensed tax professional at Tax Defense Network.

“What many people of all ages fail to realize is the significance of creating or ignoring issues with the IRS,” Erwin says. “If you choose not to file your returns, for instance, a series of undesirable events are sure to follow.”

First, the IRS may file a Substitute for Return (SFR). This allows them to use whatever previous tax information they have on you (no matter how inaccurate) coupled with information provided by your employers to file your return.. This substitute can work to your disadvantage by creating a tax liability that could have been avoided if you’d simply filed accurately, on time, she says..

“If you do wind up with a tax debt and you don’t pay it, you’re really asking for trouble, Erwin says. The IRS can place a lien against you, destroying your credit, or garnish your wages or bank account. If the debt persists, the IRS can even seize your property and assets. And while these are all serious actions, the worst is yet to come.”

“The problem with unpaid tax debts is they tend to become inflated in a short period of time,” she says. “The amount you originally owed quickly mutates with the addition of penalties and interest. What you end up with is a staggering tax bill which has destroyed your credit and haunts you for years.

“By the time you realize just how big of a mistake you made, you’re not young anymore — and you’re in a conceivably worse position to do anything about it. None of this has to happen, of course. If you have a tax debt, consult with a licensed tax professional who can ensure your youth is spent on more entertaining pursuits.”

25. Not having a personal financial advisor

Just as everyone needs a family physician, a financial practitioner is needed every bit as much, recommends Rob Drury, executive director of the Association of Christian Financial Advisors. Without one, you could be headed to other financial mistakes.

“A financial advisor’s job is absolutely identical to the doctor’s; he assesses wellness, diagnoses illness, prescribes cures, and designs wellness programs,” Drury says. “He simply performs these functions in the financial realm rather than the medical.

“Employing a qualified advisor and being accountable will prevent one from committing most financial mistakes. Most basic planning functions can be performed at little or no cost.”

That’s our list of the worst financial mistakes to make at any age. What are some of the worst financial mistakes you’ve made?

This article by Aaron Crowe first appeared on and was distributed by the Personal Finance Syndication Network.