There are lots of ways you could end up in debt. History is littered with people who always swore it wouldn’t happen to them –- only to find it eventually did. I’m not including the act of buying a house here, because a mortgage is a different type of debt. I’m talking about the myriad ways you can owe money to people and creditors that ultimately get you into money trouble for a long time. Check out this distinction between good debt vs bad debt.
8 Reasons Why You’re In Debt!
Here are eight tripping points to watch out for that could lead to bad debt.
1. Do you settle for higher interest rates on your debt? This is a classic way to start piling up debt on your credit card. Never settle for just any card. Look for a card with lower rates. If need be, swap your card with one that has better terms. Do what you can to lower your credit card bills. If you are thinking of consolidating your credit card debt, then check out some popular 0% balance transfer credit cards with good terms. These cards may be the kind of tool to motivate you to address your debt more aggressively.
2. Do you lack patience? A lot of people do. It’s why we live in a society of instant gratification. If you roll back the clock and save for things again instead of spending money you don’t have, you’ll find it harder to get into debt.
3. Do you let friends lead you astray? Do you have good intentions of saving money and being good, only to blow it when your friends invite you out for the evening? If your budget goes to hell when you do this, go out less often. Find ways of doing things on a budget whenever you do go out.
4. Do you buy things you don’t need? Everyone does. If you reduce the number of times you do this, you’ll reduce the chances of getting in debt too.
5. Do you always want the best? This doesn’t apply to everyone. But if you have to get brand named goods instead of generic ones, you could be in danger of spending more than you can afford. Ask yourself whether you really need to get the best or most expensive items all the time. Quite often you really don’t.
6. Do you treat yourself a bit too often? There is nothing wrong with the odd treat. But if you are treating yourself every single day, there is a good chance that you are using money to make yourself happy. Find other ways to treat yourself instead. You’ll get the same effect and you’ll run less risk of falling into debt.
7. Do you always live for today? Many people do, but you need to get a balance between today and tomorrow. Living for today leads to a lot more spending. When tomorrow comes, you may suddenly realize that you don’t have enough savings put away. You can live for today to a certain extent, but make sure you don’t sacrifice your future entirely, in the process.
8. Do you buy before you think? We all do this occasionally. But if you are doing it often, you are setting yourself up for more debt. Say you buy ten things for ten dollars each. But what if you only really need three of those items? You could have saved yourself $70 if you had thought before you bought!
Could you put all these things into practice and still fall into unnecessary debt occasionally? Of course. No one is infallible. But you will owe a lot less if you follow the steps above.