Money Mistakes Our Family Made in 2010 and How We Learned from Those Mistakes

When it comes to money matters, our family is a pretty shrewd bunch. We live frugally, spend wisely, and make every effort possible to live within our means. Even the best of us make mistakes however, and this year, our family made some huge money mistakes that backfired on us. While these mistakes didn't ruin us financially, it did have the effort of costing us more money in the long run. Fortunately, we've learned a lesson from these huge mistakes and won't be repeating them in 2010.

Got behind on the property taxes. Not all mortgages collect property and insurance as part of the mortgage payment. With a Principle/Interest only payment (known as PI), it's the responsibility of the property owner to pay those property taxes when they come due.

While I usually set aside a fixed amount every month for taxes and insurance, 2009 saw those funds being diverted to pay off some family medical bills. I figured that the 12% the county charged on late taxes was cheaper than the 25% a credit card would charge me to advance emergency funds. Was I ever wrong. Late tax payments come with penalties and compounded interest which will increase a tax bill by an alarming rate. I'm now in the position of playing "catchup" with the 2009 taxes while scrambling to save enough for the 2010 bill when they come due in December. Will I make this mistake again? No way. The smart strategy is to pay off the property taxes when they come due, and take out a home equity line of credit if faced with a medical emergency again.

Charged too much on a single card. Our family has several credit and charge cards but use the one with the lowest interest rate for charging unexpected repairs and maintenance costs to our home and rental properties. What I didn't realize was that exceeding 50% of an available credit line actually lowers your credit score, even if all the other credit cards show a zero balance.

Our financial goal for 2011 is to build up an emergency fund for unexpected rental repairs so as to avoid charging at all. If in the meantime if we must charge a major expense, we'll split the costs between several credit cards instead of piling them onto a single card.

Was too sloppy with receipts. This one huge mistake comes back to bite me year after year though I swear I'll always do better. Receipts are the proof a person has of making a donation, incurring a business expense, driving charitable or medical miles, paying medical bills, and all those other expenses that are considered to be tax deductible expenses. Sloppy handling of receipts meant that we didn't get our $400 state tax credit or were able to deduct legitimate business expenses that could have reduced our bottom line for the 2009 filing year. For 2010, I got in the habit of shoving the receipts in my desk drawer....it's not a perfect system but at least it's a start.

No matter what kind of system you use, what's important is to start saving all the receipts in a location where they can found at tax time. Saving receipts and tracking those medical & charitable miles means that you'll get the deductions you are entitled to when filing an income tax return.