4 Terrible Spending Habits that are Leading You to Debt Disaster

Companies are constantly using crazy marketing techniques to tempt consumers into buying things they don’t really need with the money they don’t really have and our spending habits are slowly plunging us in debt that some will never be able to overcome.

Thanks to the irresistible deals on post-Christmas, Boxing Day and Black Friday sales, most of us will be starting off the new year with a bank balance in the negative and high interest rates on credit or personal loans that take an eternity to pay off. But if you want to stay out of the clutches of debt collectors, then its time to give up these bad spending habits that are leading you to a debt disaster.

You’re Spending More Than Your Paycheck Allows

Keeping track of your monthly expenses and living within your means will help you steer clear of a debt disaster

Most people who prefer convenience while shopping consider credit cards a blessing – but it can often be a curse, especially when you’re not keeping an eye on how much you’re spending. Most of us spend more than we make without even realizing it because it’s so easy to borrow a little money from a friend, use credit or dip into your saving for some extra cash. As easy as it may be to spend more than your paycheck allows, you can’t go on like this forever.

Sooner or later, all this debt is going to add up and your overspending will catch up with you – with a big, fat interest rate on its forehead. Apart from accruing loan interest, you’re also going to deplete all your savings and run out of sources to borrow more money from. To prevent this problem from happening, keep an eye on how much money you’re spending and try to limit your expenses so that you live within your means – unless you like being chased around by debt collectors.

You’re Spending Money that You Don’t Have

Credit cards are popular due the convenience of delaying payments till the end of the month, but they often come with big interest rates if you’re unable to pay back in time

It’s obvious that if you’re not living within your means then you’re spending money that you aren’t really making. And guess where that money comes from? We understand that it’s the big sale season and you probably can’t stop yourself from splurging on marked down items, but if you’re maxing out on your credit cards every time, the money you’re borrowing from your bank doesn’t come interest-free.

If you’re unable to pay back your bank in full, the debt that you’ve created will grow over time and spend the better part of 2018 struggling to pay it back. Use your income to pay for all your expenses and you’re anticipating a huge sale, save up for it in advance so that you don’t have to take out a loan.

You’re Using Credit Instead of Cash

Use cash or debit cards to pay for goods and leave credit option for biggest expenses such as electricity bills or rent.

Credit card companies love it when you use your little plastic card to pay for everything you buy. Want to know why? Because they make a juicy interest every time you splurge on something with your credit card. Most people are so used to the habit of paying with their cards that they do it even when they have cash in their wallet. But if you’re not willing to pay for it today, what are the chances that you’ll do it later when the credit card bill comes knocking on your front door, and postponing credit card payments will one day make you wish that you had used your own money instead to make the purchases.

You’re Using Credit Even for Small Purchases

If you have all your earnings in a checking account or cash, but you still use your credit card to pay for gas, movies, groceries or food, then you’re making a big mistake. Credit cards have this ‘buy now, pay later’ appeal to them which puts most Americans in trouble. They often put out enticing offers such as bonus points, extra miles or cash prizes to persuade people to use their cards for purchases but these freebies aren’t that free after all since they come at the expense of the interest that you accrue on credit.