Break Bad Spending Habits That Keep You in Debt

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Are you one of those people who live from paycheck to paycheck? When it gets closer to payday, do you look at your checking account balance and see that it is almost at zero and you wonder where did all your money go? Without even thinking about it, there are things you subconsciously do in your everyday life that contribute to you not being able to get out of debt. You will see, as evident from this article, there are habits you probably have that are keeping you broke and not enabling you to start digging your way out of debt.

Ask For a Raise

If you have been working at the same place for a while, ask for a raise at your next performance review. Even in this tough economy, it doesn’t hurt to ask and the worst thing that could happen is your boss telling you no. You will never get anything unless you ask for it.

Making a little extra money every month could be helpful in paying down your credit cards or socking it away into a 401K or a similar money-making account. Speaking of credit cards, call the credit card company and ask them to lower your interest rate. Tell them you are working on paying it off and they might be interested in helping you. Again, the worse that can happen is them telling you “no” — but you never know what they will say unless you try.

Stop Carrying Cash

You know that paying with plastic is bad, but carrying lots of cash can be just as bad, if not a worse, habit. Cash can give you the feeling of having extra money just sitting in your wallet waiting to be spent. Studies have shown, if you have to buy something with a credit card, you will actually think about making that purchase a little bit harder. If you have cash in your pocket, you are more likely to buy that item without even giving it a second thought.

If you are going to carry cash, make sure to bring only enough cash for what you need and leave the rest at home. And, another study showed that if you carry large bills, like fifty’s or hundred’s, you are more likely to not spend those as readily as if you have a pocket full of five’s or ten’s. It is harder for someone to break a large bill for a small purchase.

Stop Emotional Shopping

It was a rough week, or a good one, or you want to reward yourself for losing a few pounds, so you go shopping. You earned that new dress, that new gadget — it was on sale, too. Letting your mood dictate your buying decisions is the quickest way to go broke. Sober up before shopping. Do you need these items, and can you afford them? Be honest with yourself. Reward yourself by doing something that doesn’t cost, like taking a nice bath, or spending time with your loved ones and/or friends.

Another bad habit is making impulsive purchases. You see a great sale on the Internet or in a store and you think you can’t pass it up because it is too good to be true. Curb your urges to purchase items at the last minute or just because they are on sale. Ask yourself if you really need this item and can you really afford it at this time. Chances are you will answer “no” to both questions and you can save yourself a lot of money.

Stick to Your Goals

Here is a typical scenario — it is Wednesday and you are tired and you are on your way home from work. You have no idea what to make the family for dinner so you stop to get some take-out at the GMO Chicken Shack. A recent study showed the average family of four spends over $4,000 a year on eating out — a very expensive habit that will get you broke in a hurry. Try spending Sunday planning your week of meals and maybe cooking some of it ahead and freezing it — you will not only save a lot of money but you will eat way healthier.

Making a plan and setting goals are the best way to break bad habits. If you have a goal to save a certain amount of money each month and put it into a savings account, this will keep you from slipping back into your old habits and keep you focused on creating more productive habits.

Forget About Keeping Up With the Joneses

If you’re constantly comparing yourself with others and trying to outdo the neighbors with material goods, you could be fueling a debt addiction. One-upping friends and family by purchasing luxuries on credit can turn into a competitive sport — a costly one. Avoid serious financial problems by living within your means and buying only things you can honestly afford. Trying to keep up with the Joneses can be the fast track to debt problems or even bankruptcy.

Depending on Cash Back Credit Cards

If you tend to pay with credit just because you know you are “earning” a portion of it back in the form of cash or rewards points, you could be fueling a dangerous addiction to credit card spending. Cash-back credit cards typically pay you back a very small percentage of your charges — think $1 for every $100 you charge. Unless you’re very disciplined about paying off your entire balance by month’s end, the money you earn back will barely cover the interest charges you acquired on that spending spree.

The most important thing about breaking bad habits is actually recognizing them in the first place. If you can relate to any of the above habits, then, you need to take a hard look at your bad habits and think about how you can change them into good habits. Digging yourself further and further into debt does not take a lot of effort and it is the small things that hurt your financial future the most.

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