7 Net Worth Killers (From CNNMoney)

From CNN Money – 7 Net Worth Killers (links along with my lovely commentary):

1. Ignoring your money

Don’t take the “invest-it-and-forget-it” mentality too far. Also, don’t have too much of your money in low-yielding savings accounts.

2. Buying too much house

The bigger the house, the more you’re going to spend in mortgage payments, upkeep, taxes, and everything else. So, although the equity in the home will help your net worth grow, the money spent keeping it up will take away from your net worth. With all the dumb mistakes my wife and I have made, we made awesome choice when we bought our house. We bought what we could afford but were able to find a house in a great neighborhood. Our house is now worth about 60% more than we paid for it nearly eight years ago.

3. Driving too much car

No comment. This is a no-brainer.

4. Paying the IRS, not yourself

Take advantage of all the tax-savings vehicles that are LEGALLY available to you. Again, this is a no-brainer.

5. Always getting what you want

A lot can be said for practicing self-discipline in your spending. A lot of times we want things only because they are new or popular, which means we’re going to pay more for them. I remember people paying $10,000 more than sticker price for the Mazda Miata when it first came out. Now look at how many of them you see out on the roads. If we can force ourselves to put off buying these things, the newness will wear off and the price will decrease and we can buy them for a lot less (or we will have moved on to something else).

6. Letting your assets linger

Balancing your net worth with your cash flow.

7. Letting your debt lie

Common sense here. If you have debt, you want it to be at the lowest interest rate possible. You also don’t want to carry credit card debt or consumer debt any longer than you have to.

This is all common sense stuff. You just have to do it.

Now watch – a blogger will turn this into a seven-day “series.”

5 thoughts on “7 Net Worth Killers (From CNNMoney)”

  1. I would add one more item: not being honest with yourself.

    For example, if you can afford to live in a new place if you just cut back on eating out a little… then you probably can’t afford to live there. The rotating 0% credit card balance transfer only works if you really are disciplined enough to ‘pay’ the balance in your 5% savings account, and not touch it until the introductory rate ends.

    It’s ok if you can’t do it, as long as you plan accordingly; but if you deceive yourself into taking on a commitment you can’t handle, you’re in trouble.

  2. The best thing about common sense is that its more of a rarity than anything else. We’re all guilty of doing things that just don’t make sense. How many people out there drive nice flashy new cars but have to live with mom and dad just to pay for them? Common sense would say they should save their money and move out but the order of priorities is completely different at different stages of your life and net worth doesn’t come into the decision equation.

    Moderation and thought about your actions and decisions will go a long way to not falling for the 7 net worth killers.

  3. @ Independent George – I second that “not being honest with yourself” statement. It pretty much sums up most of the other 7 NW killers when you think about it.

    The ability to step back and take a brutally honest assessment of yourself, your capabilities, and your situation, is the fundamental underpinning of success. This is, of course, not to suggest an exercise in beating yourself up. I’ve learned that that is counter-productive.

    But, you have to play to your strengths, and mitigate your weaknesses. Without understanding what those strenghts and weaknesses are, you have no basis for a plan of action.

Comments are closed.