7 Financial Decisions That Can Set You Back ...

If you want a good financial outlook, avoid financial decisions that can set you back. Your personal finances can shift without warning. You can be on top one month, and down the next month. But if you recognize financial decisions that can set you back, you're more likely to avoid long-term financial problems.

1. Splurging on a House

Who doesn't want to live in their dream house? Unfortunately, splurging on a house is one of many financial decisions that can set you back. When you overspend on a house, there's a chance that you’ll end up house poor. And if all your money goes towards your house payment, there’s little left for saving, paying off debts or enjoying life.

2. An Expensive Car

You may also wish to buy a nice car. To some people, an expensive car and house are a status thing. There is nothing wrong with nice things, but if you buy a car that you really can’t afford, it can take years to recoup.

3. Cosigning a Loan

If your sibling, cousin or friend asks that you cosign a loan, don't be afraid to say no. Cosigning a loan helps another person get financing, but it can also ruin your credit and your finances. There’s the possibility that this person will stop paying the creditor. If you don’t take over the payments at this time, the delinquency will hit your credit report.

4. Using Your Credit Card to Finance a Vacation

I'm not saying that you should never use a credit card to pay for a vacation, or any other purchase for that matter. But if you use a credit card, make sure you're able to pay off your balance in full next month, or at least within the next few months. The problem with using a credit card is that the balance might sit for several months or years. As a result, you end up paying off a vacation over several years, and paying a ton of interest in the process.

5. Not Checking Your Credit Report

It takes about 10 to 15 minutes to order your personal credit report. Yet, some people never check their credit history. If you’re a victim of identity theft, or if mistakes appear on your report, it can take months or years to correct these issues. In the meantime, this information can drive down your credit score and stop loan approvals.

6. Ignoring Your Retirement

Retirement may seem like years off, but the earlier you start planning, the more cash you’ll have when you leave the workforce. You can delay retirement planning until your late 30s or early 40s. But if you get a late start, you may have to work into your 60s or get a part-time job after you retire.

7. Not Saving for an Emergency

You're not invincible. Therefore, don't think that an emergency can’t happen to you. Whether it's a costly car repair, an expensive home repair or a medical bill, a huge surprise expense is likely at some point during your life. It only takes one major issue to set you back financially.

You may not perfect your personal finances, but if you make smart financial decisions, you're less likely to deal with costly issues that can wreck havoc on your money. How do you handle financial setbacks?