5 Common Habits Of People Who Get Themselves Into Too Much Debt
People that are in debt don’t get themselves into the situation overnight. After all, debt accumulates over time, often before people realize how serious the situation has become, and it can usually be connected to bad habits. While everyone in debt is in the situation for different reasons, there are many habits that are commonplace for those dealing with financial difficulties, many of which can be avoided.
Check out these 5 common habits of people who get themselves into too much debt, so you can avoid making the same mistakes!
1. Poor Bill Management
Bills take up a huge portion of everyone’s paycheck, so those that don’t manage their bills often find themselves dealing with debt, whether it’s from missed payments, late fees, and bank charges. Automatic bill payments are becoming more common, and while it means there is no chance of forgetting to pay a bill it can catch you unaware if you don’t have enough money in your account when its deducted. Overdraft fees and penalties are therefore common with people dealing with automatic bill payments, while those that can’t manage their bills can easily spend more than they make, leading to a spiral of debt that is hard to escape and sometimes leads to filing for bankruptcy.
2. Spending More Than You Make
An all too common habit, many people manage to get themselves into mountains of debt by simply spending more than the make. Whether borrowing money, using credit cards, or using savings, it’s surprisingly easy to spend more cash than you have coming in, and it only leads to serious debt. Overspending is fine when done infrequently, as sometimes life throws the unexpected your way, but spending more than you make monthly is never going to end well. You must spend within your means to avoid creating debt, so be sure to reduce spending to avoid debt.
3. Impulse Buying
Ever see something and want it immediately? You may not really need it, but you must have it? This is impulse buying, and it’s one of the key spending habits of people in bad debt. Credit cards and online shopping have made it even easier to buy something without thinking of the consequences of your purchase.
4. Lack of Budgeting
Budgeting is rarely fun, but people that do it always have better finances than those that don’t. People that get into serious debt often find themselves in this position because they don’t know how to budget. Without a budget, it’s easy to lose track of your incoming money and your spending, which is an easy way to get into debt. Those with credit cards are more at risk without a budget, as you can easily spend more than you make in a month, slowly accumulating debt as you do so.
5. Misusing Credit Cards
Credit cards are one of the leading causes of debt, and it’s mostly caused by misusing them. For instance, people that use their credit card for everyday purchases like gas, groceries, and entertainment are less likely to pay for the purchase immediately. When using credit cards for minor purchases that you can afford with cash, you run the risk of building up unnecessary debt, especially when not paying bills in fuel next month. It’s easy to throw something on a credit card and worry about it later, but later usually means forgetting about it, which then turns into debt.
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