If our bills are greater than our income, it’s safe to say…we’re in trouble! It’s when we find ourselves in situations like this, that we’ll only keep adding to our debt whenever we spend more money than we make. The first thing we need to do is we need to get our spending under control. When we get to the point that we whip out the credit card to pay for a cup of coffee…or two…or three (throughout the day) with that bagel or egg sandwich, or grab a bite to eat for lunch every day at the nearby restaurant or deli, or order take out for dinner every (or almost every) night, because…heck, I don’t have the cash on me and I’ll just pay for it when I get the bill next month! That’s when we “nickel and dime” ourselves into that never-ending cycle of debt. We need to get our spending under control and whenever at all possible, avoid unnecessary debt!
How to Avoid Debt
Those are just a few examples of those small, unsuspecting ways you get yourself into trouble with debt that slowly and incrementally build up until you eventually find yourself in over your head. Then there’s those big dollar purchases that you need to become aware of also. Those are the ones that should be more avoidable, because you generally see them coming. Like that brand-new motorcycle, snowmobile, boat or jet-ski you just have to have. Or the extravagant, exotic vacation destinations, or that giant flat screen TV with the upgraded surround-sound system. The kind of stuff that you don’t really have the money for…but that’s okay, just buy it on credit! And why not?! Everyone else does it! Everyone else has that cool stuff!
Now…don’t get me wrong, those things are nice to have and they make you feel good. That is until the bill shows up every month and you have to figure out what’s going to get paid first and when! This goes back to distinguishing between your needs and wants and the feeling of instantaneous gratification for getting what you want NOW and worrying about paying for it later. But why even put yourself in a position to have to worry about it later, when with some adjustments and a little sacrifice now, you could avoid any worry at all.
“You can’t be in debt and win. It doesn’t work.” – Dave Ramsey
Once you realize you’re in a debt spiral, you need to figure out how and where you’re spending your money and what adjustments can be made to stop the madness. This is where you need to be creative and/or make some tough choices (or sacrifices), whether you like it or not. For example, bring coffee from home or use the coffee maker at the office, bring lunch from home, prepare food at home for dinner more often, try a “stay-cation” by exploring and finding great places to visit near home, when you get the itch to get back on a motorcycle again, get that snowmobile, boat or jet-ski you’ve been wanting or whatever it is, you need to make a plan to put money aside until you have enough to buy it outright. This is where a little patience will go a long way.
When it comes to avoiding unnecessary debt, the best rule of thumb is and always will be…if you can’t pay for it in cash (or pay the bill in full when it comes) then you shouldn’t be buying it at all! Just sticking with that concept alone will do wonders for your financial situation no matter where you are on your financial journey. I understand it’s always easier said than done, but if you’re serious about your financial well-being and getting your financial house in order, then you need to get serious about your spending habits. It’s how you choose to use your money in the little ways that will put you on the right track to bigger financial goals.
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