5 mistakes you don’t want to make in a bad economy

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Have you thought about taking cash from your credit cards or home equity?  How about liquidating your retirement savings? 

According to Bankrate.com, these are all bad decisions people are most likely to make in 2009. 

The website is warning consumers about the top five financial mistakes and how to avoid them. 

1. Relying too much on credit cards. Whether you are out of a job or just tight on cash, Bankrate.com said you should use credit cards as little as possible. Try tracking your spending for 30 days to see where your money is being spent.  Cut back on “extras” like text messages and premium cable channels you never use. 

2. Taking cash out of your retirement savings. If you feel there is no other option, then you need to know the penalties associated with cashing out any of your retirement accounts. If you are younger than 59 and taking money out of a traditional IRA, the IRS can hit you with a 10 percent penalty and tax you at least 25 percent. 

3. The third mistake is for those of you who don’t send in your free application for federal student aid. You could be missing out on free money or at the very least, cheap money. 

4. Don't ignore your investments. Meet with your financial advisor at least twice a year to keep yourself on track and your options open.

5. The fifth mistake is obtaining a reverse mortgage without knowing all the facts. 
A reverse mortgage means you basically get paid monthly for giving up your house when you die. The idea of a reverse mortgage may be appealing to those over the age of 62, but it is expensive and not for everyone.