5 Habits of People In Debt
Many people don’t realize that poor financial habits are perhaps the biggest contributing factor to falling into debt, rather than personal circumstance. Once you’ve accepted that you have a financial problem and seek help to correct it, you will find there are many solutions to help you repair your credit.
Here are 5 of the most common bad habits of people in debt.
1. They Don’t Stick to a Budget
Having no budget means having no plan for your money, which in turn means you’re more likely to waste money and overspend. While sticking to a budget can be difficult at times, it is one of the only surefire ways to prevent yourself from ending up in debt.
Most people don’t realize they need to have a budget until they’ve already accumulated an alarming amount of debt. Don’t wait until you’re in a tough financial spot–make planning a budget a top priority.
2. They Try to Keep Up with the Joneses
A common bad habit that sends a person into debt is thinking you need to have certain possessions to prove you are just as good as the people around you. Even if you make enough money to live a comfortable lifestyle, if all your neighbors are living extravagantly it can make you feel insufficient by comparison.
Many Americans can’t afford the lifestyle they live, and it’s likely that the people you’re trying to keep up with are living beyond their means, too. And honestly, if you have to impress to get them to like you, you’re better off without them.
3. They Don’t Have a Backup Plan
The best way to protect yourself from financial ruin when the unexpected strikes is to have a savings account and the proper insurance to guarantee you’re prepared for anything. If you don’t have a backup plan, something as simple as a car accident or broken bone can leave you financially devastated, causing you to take out high interest loans. With a little bit of planning, you can prepare yourself for the curve-balls life throws at you. When the unexpected happens, you’ll be able to recover and move forward much faster and with less stress to your life and financials.
4. They Tend to Be Disorganized Financially
When you’re disorganized financially, you‘ll find yourself missing the due dates on bills and forgetting when auto payments are deducted from your account, which ultimately leads to late fees and overdraft charges. These extra fees tend to accumulate rapidly, leading to a financial tailspin that sends you into debt at a much faster rate.
5. They Are in Denial That a Problem Exists
If you don’t recognize that a problem exists, how can you plan to fix it? Many people figure that things will eventually work out, and by some miracle (maybe when they win the lottery) their financial problems will be solved. This is possibly the worst bad habit a person in debt can exhibit, since a person in denial will likely continue to spend money until they’ve become so far in debt, it will take years to repair the damage.
Getting Back On Track
The first step is acknowledging the problem, and if you are able to do that then you’ve already come a long way to regaining your financial independence. Establishing new financial habits and tackling some of the bigger tasks like credit repair can take months and even years, but it will be worth it in the end. However, every journey begins with a single step, so if any of these 5 bad habits of people in debt resonate with you, then you’re already on your way!
Submitted by Jennifer Outram
Lexington Law Reviews