5 bad habits that you need to break free to get out of debt

Posted by hasnain shah alam on February 24th, 2021

Every one of us indulges ourselves in certain habits that either bring us something good and sometimes nothing. However, while such day to day habits might seem harmless, you need to consider the potential effect they can cast on the bottom line of your life. Spending a dollar here and throwing a dollar there, all add up after a while. Therefore, despite your endless efforts in the other areas of your life, the habits that you shrug off as harmless could still push you down the cliff of debts.

That is because people who generally find themselves stranded in financial dilemmas more often share identical financial behaviours. If you can recognize these habits early on, you can prevent yourself from confronting a number of money troubles and even if you are already in the red zone, realizing and adjusting the harmful behaviours can put you back on track.

Bad money habits of constant debtors

The Federal Reserve and the Census Bureau once compiled data showing the credit debt of an average household. The total sum was a whopping 15,191 pounds, which implies that individuals were owing a lot more than 845 billion to the providers of their credit card altogether. Some consistent habits are responsible for creating a fine lean between people who are prone to get in debt and the ones who would barely enter this danger zone.

Some of the behaviours mentioned below, need to be watched out for if you do not incline to go under any debt.

Impulsive buying

Some people are addicted to snatching everything from the shopping racks without caring if there is any discount available on the item or not. Such people are usually the ones that are constantly in debt. This bad behaviour further leads to very dangerous and rigid spending behaviour.

Justifying poor purchasing decisions

By constantly justifying the need for hoarding expensive bags and gadgets, people stop feeling any remorse for draining their money over things that scarcely make any sense.

Using credit card impulsively

An impulsive shopper buys everything without any prior planning, whether they have adequate funds to cover the costs or not. This implies that they are using their cards to purchase items that are beyond their affordable range.

Losing the track of the budget

Although most diligent budgeters can also mess up with their budget from time to time, they usually get back on track, as they are not in the habit of overspending. Whereas a perpetual spender keeps losing sight of their budget and the financial goals as well. Moreover, when you already decide that your budget is blown beyond recovery, you are likely to just keep swiping your credit card and that is a very slippery slope.

Although a time to impulse buying does not leave a lasting impression on the finances, hoarding and overspending habits can seriously derail your financial goals. Therefore, you should develop a plan that can help you put up with that vexing itch that drives you to spend without thinking much.

A professor at the University of Connecticut School of Medicine, Julian Ford suggests his readers come up with a specific mantra, so they can keep remembering their goals. For instance,” Purchase only what is needed”. So, every time you are about to make an expensive and unnecessary purchase, you would remind yourself of your mantra and walk away.

Credit card used for gaining  points

Not every reward credit card is evil if it is used responsibly, thereby it deserves a room in your wallet. However, one must never forget that there is always a reason why credit card companies offer such rewards and it is not because they care for you. Rewards are there so you can spend more, that is it!

While you can score a little cashback on your purchase, usually credit cards impose some heavy restrictions. Ranging from annual caps to some higher cash-back rates for a very limited time, it is likely that you are not saving as much money as you might think. Going into deeper debts simply to pursue an almighty credit card point is just not worthwhile.

If you see yourself in credit card debt, you should look into moving your balance to a card that has a lower APR, as this would help you in reducing the amount you are paying the interest for every month.

Keeping against one another

According to real estate agents, it is always better to have the worst house in the best street than the best house in the worst street. However, when people see their neighbours having it all, the longing of getting the best house in the best street organically develops. Consequently, this perpetual competition makes you start overlooking the financial savvy in you. Competition is one of those deadliest psychological triggers that lead you to make horrible spending decisions.

Some fortunate people barely care about measuring up to standards set by their peers, nevertheless, societal standards can be a real challenge for a lot of others. When people see their other family members or friends purchasing new homes or vehicles or when they find out that somebody they know is taking a pricey vacation or wearing an expensive accessory, they feel an innate compulsion to compete.

Therefore, it is pivotal to always remember that success cannot be measured from the exterior. Whenever you see your neighbour pulling up their shiny new car, remind yourself that you have certain priorities to meet certain goals. There is nobody who can see your retirement account balance, but you still ought to work towards a secure future by making yourself diligently contribute to it.

Shopping for satisfaction

Have you ever gone on a shopping spree just because you feel like it?

If you have, then nothing to worry for you are not alone in this. It has been proven that shopping releases happy hormones called endorphins that have the same amount of pleasure you get from exercise, chocolate and sex. However, unlike those three things, shopping unnecessarily can form itself into an addiction. Shopping just so you can boost your mood, forms an unbreakable link between material goods and happiness, which is no less than a recipe for financial and psychological disaster.

An assistant professor of psychology at the San Francisco State University suggested that all of us should check our emotions before we buy anything, as this would prevent us from being an emotional shopper. Therefore before you are handing over your credit card, think twice about why you are buying the item in the first place, is it because you are really in need of it or are you just hoping to get your mood turned around by it.

If your emotional spending gets beyond any control then you must seek professional help. Shopping addiction is a very real thing and it is understandable if you find it difficult to break. However, you must hire a dedicated mental health professional so that you can be helped in finding your coping mechanisms.

All shopping is not bad, but you must not do it just to make yourself feel better. When you find yourself on a shopping trip, make sure that you are looking for ways to save as much money as possible and wise. Some very helpful budgeting apps can aid you to save money on nearly every shopping trip of yours.

Hoping for a miracle

People who find themselves often under debt usually believe that only a money miracle can get them out of their financial miseries. However, you need to tell yourself that no lottery ticket, a new job or sudden reward by your rich relative is about to fall on your lap.

The reason why this kind of mentality is almost poisonous is that it takes away from you any sense of control that you might have. When people hope for others to swoop in and save them from their bad conditions, they start losing grip on their financial steering wheel and emotionally severe themselves from their debt. Everyone must always remember that their debit, credit and lifestyle belong to no other than themselves and therefore only they can improve their condition.

Rather than wasting time praying for a miracle, one should start opening their bills and make a reasonable budget. Set up your payment agreements so you can stay current and try to pay all of your bills before time. It is also very important to remember that the only person that could get affected by your debts is you.

These are not the only bad habits exhibited by people in perpetual debt, but they are the top common ones and of course, the solutions to each of these problems vary from person to person. For instance, some people who are trying to overcome their over-spending habits might just need to take up a hiking trip to get their mood boosted, while other people just need to cut up a bit of cash to curtail their temptations.

However, the first step to the improvement is the same for everyone i.e. recognition of the bad habit. Therefore, if you are facing any money problem, it is time to take a pause and do some self-reflection. This is how to pay off debt.