Why You Are in Debt
Getting into debt is not particularly hard - Getting out of it can be. One of the most difficult challenges with getting out of debt is to stop the behavior that keeps putting you there in the first place. Numerous things can happen in life that can negatively affect your financial circumstances. You can may have lost your job, been injured and can no longer work, be dealing with divorce or a relationship breakdown or just have really poor spending habits which have landed you in serious debt.
This article outlines the ladder, the top reasons that people get into debt from their own doing. Here are five common causes that influence debt. If you fall into one of these categories, it might be time to reevaluate your situation and start to take control of your finances and debt.
Credit Cards are Appealing
One of the dangers of credit cards is that they offer a false sense of security and convenience. Having the ability to borrow straight away and pay for it later is very appealing. However, when later comes, it is often easier to make the minimum payment instead of paying off the balance. High interest repayments will kill any budget and increase debt. Stop spending money on your credit cards and start paying with cash. You can make nearly every purchase or payment with cash or a check. You can save yourself thousands of dollars and years of repayments by simply saying no to credit cards.
Short Term Thinking
When you want to take a vacation or make a big purchase, do you think about whether this purchase will impact your retirement or savings? Probably not. It’s easy to get caught up in having things now. The issue is, most of these items are not a necessity and even worst are most likely items that depreciate and will have minimal value once purchased. The next time you consider making a purchase, ask yourself if you really need what you are about to buy or if a more affordable version would be better for your financial goals.
As adults, we all like to think we are above the peer pressure game, but in all honesty, many of us are not. When all of your friends are heading out for dinner or drinks and you know you cannot really afford it, what do you do? If you are in debt, odds are good that you spend money you don’t have or you have taken money away from another expense to cover your night out. Thus begins the endless cycle of living beyond your means.
Money and material things should never define you or your family, stick to what you can afford and if you must have something, learn to save and wait until you can afford it (most of the time once you have saved up enough for it, you won’t even want it anymore).
Spending to feel better
Emotional spending is just as bad for your financial health as emotional eating is for your physical health. You tell yourself that you work hard so you deserve to splurge. That’s fine, if you can afford it. However, when you don’t have an emergency fund or a retirement account and you can’t pay your bills every month, it doesn’t work. Spending more money when you don’t have any will make you feel better— temporarily. It’s a bandage and a dirty one at that because the more you spend to make yourself feel better, the less you actually have. You’ll essentially end up feeling worst and have a large amount of debt.
Budgets can be boring and do require a bit of effort to work, because of this, many people don’t even try. Instead they often put if off for another day. If you are in debt due to poor spending habits, the need of a budget is crucial. Debt is synonymous with budgeting; essentially those with serious money issues have no budget.
Whether you are spending money to keep up with others, trying to upkeep your image with your friends or trying to fill a void, you are really only digging a deeper financial hole. Take a few minutes to choose one or two small changes you can make right now to put a little more money back into your budget.
Taking control of your finances and getting out of debt can be easier than you think. There are numerous DIY and professional services available to getting out of debt. The key is finding out which option will work best with you and your personality. Learn about 8 proven debt elimination techniques here.