10 May 5 Nasty Habits of Debt And How You Can Break Them
Debt is a destination, a place we end up when we don’t have the right methods in place of handling our finances.
Maybe a life event such as a sick child or job loss got you here. Maybe it snuck up on you without even realizing how bad it actually was.
No matter how you got in debt chances are you’re ready to leave it behind.
The beauty of paying off your debt is, in the end, you’ll no longer have it. Hooray!
However, if you don’t work on the habits that got you into debt in the first place then you’ll surely fall right back into your old ways.
A Non-Existent Budget
A lot of people see budgets as an unnecessary evil. This doesn’t have to be the case.
A budget can help you in determining just how much you can and can’t spend in each category of your finances.
It can help you keep track of your bank accounts and tell you exactly how much you have leftover after paying your monthly bills, to pay off your debt.
There are plenty of awesome budgeting programs out there that practically do the work for you. You just enter the information in once and they will start fresh for you each month.
A popular budgeting tool is Mint.com. You enter your bank information and sort your transactions into each category. There’s nothing quite like having it all right in front of you.
It really gives you perspective on those nasty spending habits and helps you know which ones to avoid.
So, you’re at the store and you see an item you just cannot live without. What do you do? You get it.
You don’t even think twice about it, well maybe you do but only long enough to rationalize just how badly you need the item and then you leave the store happy with your purchase.
It’s later, when you view your account or get your credit statement that the regret sets in.
Try this, when you see an item in the store you just have to have, wait a day or two. Weigh the positives and negatives of having said item in your life.
If you need to go as far as making a list of the pros and cons of purchasing the item then do it.
This will help you determine if you really need it or if you can live without it.
Charging Up Credit
It’s easy to buy items using a credit card because you don’t immediately feel the effect of your spending.
Just swiping a card can make it easier to splurge when you don’t have to have cash to pay up front.
Credit can be a fantastic tool when trying to raise or maintain your credit score, but when used in this way it can have a negative impact.
The most common trait among those who aren’t in debt is that they don’t make purchases they can’t pay cash for.
While this may not always work out for every situation, it’s definitely a good rule to live by if you want pay off current debts and avoid future ones.
No Emergency Fund In Sight
One of the main reasons why people start accumulating debt in the first place is because something along the line happened and they couldn’t afford to pay, so they turned to credit.
It can be large or small, but most of the time it could’ve been avoided if they had an emergency fund set up.
Your emergency fund doesn’t have to be huge. You can scale it to something realistic that works for you and your financial needs.
Try starting at $1000 or even 3 months worth of salary. It’ll give you peace of mind if something were to happen, you would have it covered.
The number one trait of those who are in debt is denial.
When you deny the debt exists, it becomes convenient to ignore the balances of your credit cards rising and your bank account sinking.
“Don’t worry, I’ll pay it back later” makes it easy to silence the creditors calling, helps you justify making those impulse purchases, or charging more to the card.
It can be difficult tackling your debt and it’s going to be a process. A process that is worth the peace of mind you’ll have when you’re debt free.
Don’t let your hard work be for nothing by allowing these nasty habits to take over again.
At Bolinske Law, we have helped hundreds of clients find solutions to alleviate their debt. It all starts with a little determination, and a phone call, and you’ll be on your way.