By Dr. Sabeeta Bidasie Singh

Do not rush to buy a house.

Everyone dreams of rushing to buy a home, but buying one before you can afford to can only lead to financial disaster. Sometimes owning a house makes sense and sometimes it doesn't. Depending on where you live, renting may actually be a more affordable option. For example, if you live in a city like New York where it’s very expensive it makes sense to rent. So instead of pouring out money buying a home, why not put your money towards investing.

Be careful who you trust with your money.

Should you totally trust your financial adviser? Not exactly. While it’s important to have a financial adviser you trust, don’t be fooled thinking they will always have your best interest at heart. They will always have their own best interest first, that is the first rule of thumb, so you need to be money-smart and do independent research. As a general rule you should ensure that your financial advisor is a “fiduciary”, which means that your financial adviser is bound by law and has a legal duty to act in your best interest at all times. When selecting a financial adviser, you must ask them questions about how they will be compensated for working for you and what other services they can offer. Based on their responses, this will give you a good idea of their motivations and how and where they will invest your money.

Is there a right time to take social security?

I encourage everyone reading this article to not take early retirement too early. If you can wait until you turn 70, which is normal retirement age your social security will add a guaranteed 8% to your monthly payout – yes, that is correct, you get 8% more per month that your peers who took their social security before you. If you take your social security at the age of 60, you will get 75% less per month than if you waited till you turn 70.

Never borrow from your 401K.

The biggest mistake you’ll make is using your retirement money before you retire, especially if you use that money to pay off existing debt. Rather than withdrawing money from your 401K, it makes better sense to take a 401K loan. If you are younger than 59-years-old and you borrow from your 401K you will have a tax penalty of 10% and a tax bill. However, a 401k loan is usually at a lower interest rate than a traditional loan, so this is a major consideration. The only other thing I should mention is that once you take a 401K loan you will be barred from putting more money into your 401K for six months.

Make Your Own Coffee.

The average coffee will cost you $4 per cup. Multiply that by the frequency of your purchases and calculate your spend on coffee per month. That adds up to a pretty hefty change, doesn’t it? If you are spending $100 per month on coffee, that is $100 you can invest in an IRA and after 40 years at a rate of return of 12% your $100 per month of coffee will be worth roughly $1 million dollars after 40 years. That is something to think about.

Do not co-sign a loan.

When a family member or a friend asks you to co-sign a loan it may be in your best interest to politely decline. Whenever you attach your name to a loan you are now assuming legal responsibility for paying back that money. Life as we know it is very unpredictable and if for some reason the borrower is unable to repay back the loan you will be stuck with the payments. Also, if the borrower is late in payments that also adversely affect your credit score.

Debt is Bondage.

You will never have financial freedom once you have debt. However, not all debts are the same. Mortgages and student loans are “good debt” because of low-interest rates, whereas credit cards have much higher interest rates. You should never put off paying down your credit card balances because it delays your debts and the rate of interest can actually be 4 times more than you pay.

Don’t Spend on Things You Don’t Need.

Have an honest conversation with yourself about needs vs. wants. The next time you are about to buy something ask yourself whether you really need this item. If it is a significant purchase, think about it for 30 minutes before you actually purchase that item and if after 30 minutes you no longer feel that deep desire then maybe you need to reconsider the decision.

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