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10 MONEY TRAPS TO AVOID

All of us make financial mistakes, but there are some doozies that can do lasting damage. We commit those mistakes for several reasons: ignorance, fear, ego, a desire for immediate gratification. Note that all those involve emotions. "We make our decision

1 NOT HAVING A GOAL AND A PLAN FOR HOW TO ACHIEVE IT

Absent winning the lottery or receiving a fat inheritance, financial success doesn't just happen. You have to know what you want to achieve and then decide how to get there. "Your financial future is in your hands," said Lynn Lawrance, a certified financial planner at Financial Network Investment Corp. in Dallas. "You can either make it happen deliberately or it will happen to you."

2 NOT BEING WILLING TO CHANGE YOUR BEHAVIOR

This includes failing to admit that you're living beyond your means. Try keeping track of all your expenditures for a couple of months, and you'll be shocked at where your money's going. Many consumers don't have a budget, or they budget ineffectively. "You grow into your paycheck," said Tim Dierkes, a certified financial planner at Texans Credit Union. "The more you make, the more you spend."

3 NOT PAYING OFF YOUR CREDIT CARD DEBT EACH MONTH

Credit cards can be a great convenience, but misuse them and they can seriously jeopardize your financial future. "Having balances on your credit cards is like trying to do the backstroke in quicksand," Salmeron said. "Pretty soon, you're drowning."

4 MAKING ONLY THE MINIMUM PAYMENT ON CREDIT CARD DEBT

If you carry a balance and you're making only the minimum payment each month, you're on a treadmill to nowhere. Minimum payments are designed to stretch out the term of your loan, and it will take you forever to pay off that bill. "A $3,000 balance at 18 percent interest will take more than 22 years to repay if you only pay the minimum," said Greg McBride, a financial analyst at Bankrate.com.

5 FAILING TO SAVE AT ALL OR TO SAVE ENOUGH TO BE REALISTIC

"Just because you have some money doesn't mean you have to spend it," Lawrance said. Build up an emergency fund that you can use for unexpected expenses. It also will reduce the need to use high-interest debt, such as credit cards, as a last resort. Most financial planners recommend that an emergency fund have enough money to cover three months of living expenses.

6 WAITING TOO LONG TO SAVE FOR LONG-TERM FINANCIAL GOALS

Delay in saving for major goals, such as a house, college or retirement, increases the amount you'll have to ante up later. You don't have to put away a lot all at once if you start early, but you do need to contribute consistently. One of the best methods is to have a set amount of money automatically taken out of your paycheck each period and put into another account.

7 FAILING TO TAKE ADVANTAGE OF YOUR EMPLOYER'S 401(K) PLANS

One of the best moves is to start an automatic savings program through your employer's 401(k). You won't miss the money, and you'll have a head start in saving for retirement. It also will save on your tax bill because the money is taken out before taxes. If your employer matches your 401(k) contributions and you're not participating, you're walking away from free money.

8 NOT HAVING ANY OR ENOUGH LIFE INSURANCE

The purpose of life insurance is to provide for your family after you die. "The probability of getting a flat tire while driving is a fraction of 1 percent," Salmeron said. "The probability of dying is 100 percent. Would you drive without a spare tire in the trunk? Then why wouldn't you carry enough life insurance?" If you have a stay-at-home spouse, don't overlook the value that he or she is providing when you evaluate how much life insurance to purchase. Think of how much you would be paying for child care if your spouse weren't home to care for the kids.

9 OVERINVESTING IN COMPANY STOCK

Consider the case of Enron Corp., where employees had more than 60 percent of their retirement money invested in company stock. Workers lost about $1-billion in savings when Enron imploded in 2001 and its stock fell from $90 a share to nothing. Financial planners say you shouldn't have more than 20 percent of your retirement money tied up in company stock. "Diversify your investments, not your advisers," Lawrance said.

10 LETTING EMOTION DRIVE DECISIONS

"I can think of no quicker way to lose money than letting your emotions determine how you invest," Salmeron said. "As an investor, you should check your excessive optimism at the door. You might believe you're the next guy to spot the next Google or Microsoft, but the odds are you're not." Instead, said McBride, "build a well-rounded portfolio that will help you weather the inevitable ups and downs while working toward your financial goals."

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