7 stupid things people do with their money that feel smart at the time

Get the Full StoryMikhail Mokhrushin Strelka Institute FlickrWe've all made mistakes with our money. While some are knowingly reckless say, an expensive night at the casino or going into debt to buy a fancy car you can't quite afford others are less obvious.

For instance, not getting a credit card because you're scared of overspending and ending up in debt sounds like a responsible move until you want to buy a car or a house and have no credit to back you up.

Below, Business Insider breaks down a handful of bad money moves to avoid that may feel smart at the time.Dipping into your 401 k early to buy a house or pay off debt.

There may come a time when you consider cashing out part of your 401 k for a short-term goal that feels more pressing than retirement like buying your dream house or paying off lingering credit card debt.

Don't be fooled: A 401 k may seem like just another vehicle for saving money, but the rules are far different than a traditional savings account. To start, money pulled out before age 59 and a half is subject to an early withdrawal penalty and will be taxed as regular income you can calculate the specific cost of early withdrawal using a tool like this one from Wells Fargo .

One of the greatest advantages of a 401 k is its ability to generate tax-free compound interest the multiplying effect of earning interest on top of the money you've already earned interest from over the long haul. Take your money out early and you'll lose a bulk of savings.

A better option if you have retirement savings and you're truly strapped for cash? Take money out of your Roth IRA, which has much more flexibility for tax and penalty-free early withdrawals.

Taking out a ton of student loans to go to school.

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The number of Americans taking out student loans to finance college is steadily rising. While a good education can lead to a higher salary, taking on loads of debt to get there isn't always a smart move.

Many people don't grasp the full scope of a student loan beyond college, including how interest rates work and how long it realistically takes to repay the loan. The average borrower has a 351 monthly payment, a sizable recurring expense for a new college graduate on an entry-level salary.

In short, student loan payments could inhibit you from reaching other important financial goals. Before you sign on the dotted line, consider the ROI of the degree you want to pursue and what other options are available, like scholarships, grants, or even community college.

Not getting a credit card.

As a 20-year-old, credit cards scared me. They seemed like free money and I thought spending with them would ruin my financial stability, even though I paid my bill in full every month.

In fact, the opposite is true. If I ever wanted to buy a car or a house, I'd need credit.

"A lot of people these days check credit scores as some sort of measure of how responsible a human being you are," says financial expert Jean Chatzky, host of the "HerMoney" podcast and financial editor at the Today Show, in a video with Business Insider's Graham Flanagan, who is 34 and doesn't have a credit card. "It's possible to have a good credit score without a credit card, but it's easier if you do have one."

But having a credit card doesn't mean you need to use it all the time, Chatzky said: "That's sort of the secret." Spend only what you can afford to pay back, and you'll build solid credit.

See the rest of the story at Business Insider