Many people assume that having debts is normal. But it is still not a pretty place to be in. If you are already in debt and are working to pay them off, it pays to take a look at these habits and break them so you can have smoother road towards a debt-free life.
Denying/ignoring your debts
It is easier to close your eyes as you hand in a couple of hundred dollars for a new pair of shoes than looking at the long list of your debts with eyes wide open. However, if you’d like to pay off your debts, you should start acknowledging them now. Think of them as your mental motivation to become more intentional with your finances.
Recklessly taking out loans
Loans are convenient because you can now virtually get them online even if you have bad credit score. You may believe that these cash loans will help you cover some of the birthday expenses which are already over the budget. However, if you take one loan after the other recklessly, you will fall deeper into the debt cycle because the interests will keep accruing. Next time you need to take a loan, consider if you have exhausted other means for funding and if the reason is really warranted for.
Refusing to follow a budget
Even if you’re not in debt, a budget will help you follow a roadmap in achieving your financial goals. Your budget will help you rationalize the sensibility of your purchases and how they might affect your finances. Your budget will help you allocate a reasonable amount for your expenses, pay off your debts and commit you to saving.
Refusing to build an emergency fund
As already mentioned, many of today’s loans are now very convenient, but that doesn’t mean you should count them as your emergency fund. Even if you’re in debt right now, you should still strive to have an emergency fund that will cushion you in case of job loss, illness and other events that will cripple your income.
Keeping up with the Joneses
Your neighbor may have a bigger house and fancier car, but you also don’t know what it cost them to get these things. Your life and property may be simple in comparison, but you do not need the burden of fancy things right now if you cannot afford it. Just work your way out of your debts and when you’re done, you can now get the things that you fancy and still be able to sleep well at night.
Do not let your debts define you and most definitely cripple you. If you think you have one or all of these habits, it is best to tame them now so you can manage your finances and get out of debts.