“Debt gets people into a lot of trouble,” said financial expert Harrine Freeman, cofounder and CEO of financial consulting firm H.E. Freeman Enterprises in D.C.
Freeman said there’s one big mistake she sees people make often: even those with a budget setup miscalculate how much money they have available on a credit or debit card.
“Before I spend money, I check my account balance, and I check pending transactions so that I always know and account for transactions that have not processed,” Freeman said.
People who don’t check their account before making purchases may see the available balance in their banking or credit card app and think it’s all the money they can spend when it’s not.
When it comes to tackling debt built up, she always recommends focusing on credit card debt first.
“The bonus is that helps your credit score,” Freeman said. “Then you want to tackle your installment debt and then any other debt that you have.”
She also urged people to never forget to build, or stop building up their savings. Freeman recommends always having an “emergency” savings account for rainy day needs. Using credit cards, loans or pay days loans for big, unexpected expense isn’t the first option, she said.
Freeman also urged everyone to remember their retirement.
“If you can, in addition to paying off debt, contribute to a retirement account that is most important, you need at least at a minimum 30 years of regular savings,” she said.
Finally, Freeman said to check your budget and your accounts frequently so that you can always have a clear, detailed financial picture.
“You want to make sure you always know how much money you have — how much money you have, how much money you earn, how much money you spend, and how much money you’re saving,” she said.
