Financial Choices that Can Leave You Confused
When confronted with difficult financial choices, it’s important to take a seat first and carefully consider the pros and cons of each option. On this post, we discuss three financial choices that you might be confronted with today or tomorrow.
Credit Card Debt OR 401(k)– Which to Pay First
Both are important. If your salary is enough to pay off your credit card debt and contribute to your 401k fund, then you should definitely finance both. But if this is not possible, pay off your credit card debt first.
In fact, you should pay as much as you can from your credit card debt instead of just submitting the minimum due payment. You should do what you can to zero in your balance as soon as you can. Remember, the longer you carry a balance, the more you would be paying on interest rate charges.
Once you have paid off your credit card debt, see to it that you contribute regularly on your 401k fund. Take advantage of this opportunity especially if your employer pays matches your contributions. Avoid accumulating charges on any of your credit card accounts, especially if you own more than one card.
You Need a Car – To Lease OR Purchase?
If you will consider the long term expenses, buying a car would be cheaper than leasing. Although monthly lease payments would be smaller and more convenient to pay, you might be subjected to certain restrictions and fees. For instance, your leasing company can impose a limit on your mileage. Exceeding that limit or failing to comply with your lessor’s terms could mean paying the penalty charges.
Nevertheless, in some cases, leasing can prove to be a more practical choice over purchasing. For instance, if you cannot get approved for a standard loan because your credit history, the monthly lease costs could be lower than the interest rate you will get from a bad credit car loan. Weigh the advantages and disadvantages of each option before making a choice.
Acquiring a Home – Rent or Purchase?
Despite the economic crisis, taking out a loan to purchase a home can still beat renting if you consider the long term costs. If you plan to stay in the same house for at least ten years, then you should definitely choosing buying. Take a mortgage loan, do your best to lower the rate and get the possible deal and purchase.
Of course, there are other benefits to buying a house than renting. You don’t need to worry about breaking the rules of your landlord and you can design your house according to your personal taste. A house is also a great investment because its value can appreciate over the years.
On the other hand, being a tenant can also be an advantage since you won’t have to shoulder repairs and maintenance costs of the place. What if you have no plan to stay on the same location for the next three or five years because of the nature of your job or for other reasons? Then perhaps renting can be a convenient choice.
