The money moves you might regret forever


There are few money decisions that cause minor financial headaches and there are other money decisions that can cause you to regret your choices for a very long time. During these times you will have difficult choices to make regarding your financial matters.
What are moves we should avoid as it relates to loans or services?
Not asking for help early and ignoring calls from your lender or service provider are the biggest mistakes that people can make during tough times. Your lender or service provider will take your no response as a lack of concern and that is not the message you want to send to them.
Why is it so important to ask for help early?
Lenders and service providers often have more options available to help if you call them before your account becomes severely past due.  Plus, if you wait too long, you might have to deal with a collection agency and they have very few options to offer to help you resolve the situation and your credit score will be impacted.
What should we know about accessing funds in a 401k?
Some might consider making a withdrawal or taking out a loan to help financially because of the recent changes allowed in the CARES Act. These changes make it possible to avoid penalties and to spread the income tax payment over three years. If you choose a loan, you can extend the repayment to 6 years. Both options are available if you can show is a COVID-19 related distribution.
What are the concerns with either of these two moves?
If should be considered only as a last resort because any funds withdrawn or used as loan proceeds will be out of the market most likely when the recovery begins.  The problem is that you are withdrawing at the low point of the market which in effect means you are selling low. Additionally, there are likely more IRS rules coming with this, so the situation might not be perfectly clear as to what the true impact will be for you.
What is another important money mistake to avoid?
Building debt instead of lowering expenses because even though your monthly payments may be minimal now, as your debt grows so will your monthly payments. Additionally, in the near future you will likely be capped on what you can borrow.  Expense controls should be the first move before building any additional debt.
What makes any these moves potentially devastating?
Overcoming any of these moves could take years especially if you make more than one of them during the same time period. All of these mistakes are truly life altering and impact everything from your ability to obtain loans to what type of retirement you might be able to have. Always consult with a professional before making any of these decisions.

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