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Habits for Wealth: Punctuality Pays

Get rich. Achieve financial independence. Become a millionaire. Do you write something like that on your list of New Year's resolutions every year?

If you're like me, any resolution becomes an obsession for a week, then fizzles into a hazy cloud of good intentions that evaporates by Valentine's Day. Resolutions just don't stick -- unless we turn the motivation to change into lasting habits.

Just as that potato chip addiction must be turned into a fever for exercise, you can get rich, achieve financial independence, or become a millionaire by changing your habits. Millionaires don't necessarily possess a secret formula for wealth. They work at it bit by bit every day.

Join me this year and cultivate the habits that build wealth. This month, promise yourself that you will never, ever pay a bill late, ever again.

Why?
I can hear your groan all the way across cyberspace. Duh! This is a no-brainer. Everyone knows you should pay all your bills on time. But it's not that big a deal. An occasional late payment never bankrupted anyone.

Why do I highlight this pretty obvious rule of money management? Because late payments may be more costly than you realize.

Start with the late fees. Tardiness will typically cost you at least a few extra dollars. For some bills, it may literally be a few bucks. For others, like a car loan, you can count on paying more. If it's your credit card payment that arrives late, expect to pay an average of $35.

Then, consider the second layer of fees, or finance charges. If you're late on a credit card payment, there's no avoiding the extra penalties. You've now borrowed the money for longer than your grace period and have to pay.

Let's say you make a regular practice of being late. Although some credit cards have started dropping this penalty, repeated late payments can throw you into a pecuniary penitentiary known as the default rate. Imagine how much it could hurt to have your credit card debt accumulate at interest rates exceeding 30%.

You'll also pay the price with future loans. Your payment history makes up a significant part of your creditworthiness, as measured by your credit score. Even seemingly small changes can cost you money. According to FICO, the difference between excellent and good credit means the difference between a 5.74% and a 5.96% interest rate on a 30-year mortgage. It doesn't sound like much, but that little bit adds up to about $10,000 over the life of a $200,000 loan. A few late payments, and suddenly you're taking out a subprime adjustable-rate mortgage with a teaser rate, with foreclosure on the horizon.

How?
OK, the situation isn't that dire, but late payments can cause you financial damage now and in the long run. They drain away money you could otherwise save and invest, putting you closer to that dream of financial independence. Do everything you can to avoid them.

If you're forever losing your keys, your wallet, and the dog, get some technological help to keep on top of your deadlines. Money management tools, which include not just Intuit's (Nasdaq: INTU  ) Quicken and Microsoft's (Nasdaq: MSFT  ) Money but also online resources like Mint and Geezeo, can help you remember when regular bills come due.

Find out whether your credit card offers email or text-message services that alert you when a statement gets issued and when a due date's near. Citibank (NYSE: C  ) and Bank of America (NYSE: BAC  ) , for example, offer alerts to customers.

If you're a habitual offender, consider setting up automatic electronic payments for your bills. Or, try an old-fashioned approach. Whenever you get a bill, immediately open it and write the due date on the envelope.

While you're paying your bills, take a moment to daydream about achieving your financial freedom.

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