Credit and Finance Mistakes

The Worst Credit and Finance Mistakes of the Year 2007

As we are now all estimating what we have done in the year of 2007 and what we failed to do, we come to remember how much we earned and spent. Different people speak about their mistakes in managing their personal finance in the past year.

Tina M. Black, Kennett: I accumulated huge credit card debt

• 'The greatest failure in my finance was credit card debt that skyrocketed during 2007. In fact, I was not going to get credit cards at all, as I know I can restrict myself from overspending with plastics. Having very low credit score, I avoid dealing with credit card companies. But once my sister almost made me get a card with her co-signing, it turned out to be awful. I went over the limit very soon (I can't resist shoe shops, Starbucks and beauty shops) and had to pay off more than 6 thousand dollars! What's more, the credit score of my sister was in danger. That is why I had to take another loan and pay of the huge balance on the card.

The matter is I never use credit cards for purchases, keeping in mind that I'm generally irresponsible as a borrower. Checks have always been my favorite financial tool, but since my sister insisted on me getting a card to build credit, I found myself in trouble.'

What Tina learned: Manage your finance the way that fits your individuality best. Avoid doing what other people say, as it may lead you to debt and other problems. Credit cards are risky, one should be able use them wisely.

Chris Gibbs, Arlington: I spent much on trifles

• 'I can't say I am a spendthrift, but in 2007 I bought a number of expensive things I could surely do without. I bought another plasma TV for the bedroom (there is one in the living-room already), a laptop for my girlfriend (I have one for myself, and the girl left me 2 months after the purchase, so I have 2 computers now), and a brand new washing machine with some fancy intellectual system (it turned out my old one could wash no worse than the new one). I just thought it would be cool to possess these gadgets, but actually I didn't need them. That is why now I have to reduce an impressing credit card debt.'

What Chris learned: every purchase should be well-considered; every spending should be thoroughly calculated. Do not buy things you have no need in, in order to save money on something really necessary.

Bobby Delatte, San Diego: I was lured by an easy-to-get credit

• 'I was a college student and there was a colorful promotion of student loans in our college. I needed money to buy a car (which I actually couldn't afford) and immediately decided to apply for the student loan which had guaranteed approval. The limit was much higher than with student credit cards. When I was approved and bought a vintage Ford (it is complete lemon, frankly speaking), I decided to read the terms and conditions of the loan... The interest was sky-high!'

What Bobby learned: credit can be easy to get, but it is always hard to pay it off. Do not agree to credit offers without knowing the actual interest rate and terms.

So many people, so many stories... Many of us made mistakes in the past year. Let us think them over and lead a successful financial life in the new year of 2008.

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.