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Five Spending Habits That Lead To Debt

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Five Spending Habits That Lead To Debt

Debt isn't something that just happens over night or accidentally as you go about your daily living. There are certain spending habits that lead to people being in debt. Recognizing these habits and dealing with them now will save you a lot of money and stress later. So if you want to stop creating more debt and paying off the debt you have you must eliminate these bad habits first.

1. Spending more money than you actually make.

This is simple, create a budget so you can watch where your money goes. The logical part of you thinks it is impossible to spend $1,200 each month when your paycheck is only $1,000 a month. Spending more money then you make is a lot easier to do than you might think. So easy you probably don't even realizing you are doing it now. It could be dipping into you savings, borrowing from others, using your credit cards or line of credit are just a few ways you can spend more money you actually bring in.

You can get away with overspending for a few weeks, maybe a month even a year or two. Sooner or later you hole-digging spending habits will catch up with you. Soon you will have no savings, maxed out your credit cards, run out of places to borrow money. You will then owe thousands and thousands of dollars, possible lose you home, car and other important items.

Keep your spending within your monthly income so that your living within your means and not trying to live a life that you obviously can't and stop creating debt. The feeling of owning a brand new car, 60" Television, going on luxury vacations and so on will be nice great for a little while, but all the debt will be a burden which will not only stress you out and create many problems especially with family.  Reduce you spending below your income and use that money to pay down your debt.

 

2. Spending money you don't have.

Spending more money than you actually make is enabled by spending money your do not have or money you have yet to earn. By you spending money you do not have you are then using your credit cards and taking out loans such as payday loans, cash advances, over drafting your account etc. When you are using these methods to pay your bills to make your purchases you are then creating debt. If you don't fully repay that debt each month your debt will just continue to grow. Remember you have interest to pay every month on that debt. You can resolve this bad habit the same way you stop spending more money than you make by reducing your expenses and relying only on your income to pay for your wants and needs. You will need to cut back on eating out, buying coffees, resorting to coupons, If this still doesn't help reduce your over spending you will then need to consider getting a part time job.

 

3. Using credit for ordinary purchases.

Credit Fix advises that using your credit cards instead of cash is a bad habit, especially when you don't pay your credit card bills in full each month. You should use cash or available cash in your checking account to make your everyday purchases like groceries, gas, clothes and entertainment. The appeal of credit cards is the ability to pay later for these items that you buy now. Some people even consider there "rewards" they might get for using there credit cards. The only problem with paying with these credit card purchases now. The total will add up to amount that you can not actually afford to pay off each month. This is why I say you need to pay with available cash that you already have. If you don't have the cash you can not actually afford it.

4. Using credit when you have cash.

Another bad habit that will lead to more debit is choosing your credit card over cash especially when you have cash on hand. You might want to get your purchase without having to "pay" for them right away and have the convenience of holding on to the money in your wallet. Chances are if you don't want to pay for your item with the cash you probably don't actually want it. People who have debt like to just tend to hold onto that cash as long as possible to give them a feeling they actually have money when in reality they don't.

To change this bad habit you have to be willing to pay for what you want with the money you have earned. Realizing that while you can postpone that purchase by using a credit card you will end up actually paying more for that purchase if you would of just spend your own hard earned cash on it.

5. Using debt to pay off debt.

Using other debt to pay off debt is not going to get you anywhere. When you use your credit cards to pay off other cards or loans you are not actually paying anything off. You are just shuffling around your debt and creating even more debt every time you do this. Balance transfers have transaction fees, most loans have some kind of down payment or origination fee. So when you use debt to pay off debt you will be worse off than when you have begun.

Using debt to "pay off" debt might be beneficial if you can transfer one balance from a high interest rate credit card to one with a lower limit. However, you have to be careful that the balance transfer fee wont negate the interest savings and that your post promotional interest rate isn't worse than your previous rate. Transferring the balance once or twice to take advantage of a great rate is different from continually transferring balances to dodge credit card payments.

 

So stop these bad spending habits now, Stop using loans, credit cards and so on to make your purchases. So you can be debt free.

 

 

 

 

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