Trap #1: Avoiding your savings account. Are you one of those people whose entire paycheck goes straight into your checking account? One of the problems with liquid funds is they seem to go down the drain more quickly. Avoid temptation by socking a percentage of your check into savings right away – that off-limits money will come in handy on a rainy day or when you want to make a big purchase.
Trap #2: Buying just what the stores are trying to sell you. Ever gone to the store for a gallon of milk and walked out with a cart full of things you didn’t know you needed? Some of us can’t resist sales and “good deals” that stores tempt us with at every aisle—but saving money on things you don’t need can empty your wallet in a hurry.
Trap #3: Paying off the wrong debt first. You’re doing the right thing—using some extra cash to pay down debts—but all debts aren’t created equal. Say you have three store credit cards with interest rates of 12%, 15%, and 18%. Instead of splitting payments equally, pay off the highest-interest debt first for maximum big-picture savings.