Since debt isn’t something that happens accidentally, I must tell you that there are quite a few spending habits that lead to debt that you should really try to correct so you can save a lot of money and a lot of stress later. I know that sometimes you might feel like you will never be able to pay off all your debt and expenses, no matter how hard you try. Well, this type of thinking is dysfunctional, since there are quite a few things you can do to minimize debt in all areas of your life. For example, you might not even realize that you often do things that increase your debt or that you make some poor money choices, despite your good intentions. Just read on and find out what are those spending habits that lead to debt that you should stay away from, so you’ll keep yourself out of trouble:
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1. Spending More Money than You Make
Spending more money than you make is definitely one of the worst spending habits that lead to debt that you should try to correct. We are all tempted to buy all kinds of things we don’t really need, and most of the time those things are pretty expensive, even more expensive than we can afford, and we still buy them anyway. If you have to dip into your savings or borrow money from others just to buy that expensive thing you think you want so much, then you definitely spend more money than you make. Before making this unhealthy choice, I recommend you think twice and see if you can’t find other options that are more affordable and that won’t increase your debt.
2. Using Credit for Ordinary Purchases
Try not to use credit for ordinary purchases if your goal is to pay off all your debt. Just use cash to make those everyday purchases like groceries, gas, clothes or even entertainment. I know that the thought of paying later for what you buy now may be appealing, but unless you discover some treasure, you won’t have more money later to pay off your debt, just more expenses. This is definitely a bad habit you should try to correct, especially if you don’t pay your credit card bills in full each month.
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3. Using Credit when You Have Cash
If you have cash, why use credit? This bad spending habit will only lead to more debt since you will be tempted to spend more money on things you don’t need, just because you have the illusion for a shorter period of time that you’ve earned a lot more. I know you may want to take the goods without having to pay for them, but such a thing is just not possible. Try to act responsibly and pay for your services now, in cash (if you have money), because if you don’t want to pay for something today, chances are you won’t want to do it tomorrow.
4. Using Debt to Pay off Debt
Before you decide to take a loan to pay off your other debts, you should try to consider the benefits of that decision and if you can afford to pay it later. Usually, interest rates on short-term loans are very high, so think again if you opt for this option to pay off your debts. Also, if you use credit cards to pay off other cards, then you are not really paying off anything. You are just shuffling your debt around and you will find it even harder to get out of it.
5. Impulse Purchases
Do you make a lot of impulse purchases? If your answer is yes, then maybe now you know why you just can’t seem to get out of debt, even if you think that you are really trying. I know how tempting it is to buy a lot of wonderful things on a daily basis, expensive gadgets, clothes that match the latest fashion trends. Yet, before spending your money on all those things, you should think twice and see if you really need them or better, if you can afford them, so that these purchases won’t affect your finances and get you into more debt.
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6. Buying Things You Already Own
This is also one of the most common bad spending habits that most people have that can seriously affect their finances and which, in the long term, can lead to even more debt. For example, if you have food at home, why would you want to eat out? Why do you have to buy more clothes when you have a closet full of fashionable things to wear and when you can’t even find any more space for these new purchases? Try not to buy all those things you already have and focus on paying off your debt instead! You will feel more relieved and stress-free later and you will also de-clutter your house.
7. Not Putting Money Aside
Try getting used to putting a little money aside every day and you will see that you will find it much easier to pay off all your debt. It doesn’t have to be a large amount of money, either. Just be consistent, budget wisely and always keep a record of your daily purchases, so you’ll be able to see where you can take that money that you will put aside, in order to pay off your debt. Make a habit out of saving a small amount of money each day and I’m sure you’ll get rid of all your debt in no time.
There are a lot of things people do that can lead to more debt. I just mentioned a few in this little article but I’m sure there are many more I haven’t talked about. Can you give me a hand and tell me if you know other spending habits that lead to more debt, habits that people should try to correct? Please share your thoughts with us in the comments section!
Sources: credit.about.com, money.msn.com, aarp.org, mywell-being.com
