Not only are there small, unsuspecting ways we get ourselves into trouble with debt that slowly and incrementally build up until we eventually find ourselves in over our head. But then we have the big dollar purchases that we have to become aware of also. Such as, that brand new motorcycle, snowmobile, boat or jet-ski we just have to have. Or the extravagant, exotic vacation destinations, or that giant flat screen TV with the upgraded sound system. Now…don’t get me wrong, those things are nice to have and they make us feel good until the bill shows up every month and we have to figure out what’s going to get paid first and when! This goes back to distinguishing between our needs and wants and the feeling of instantaneous gratification for having what we want NOW and worrying about paying for it later. But why even put ourselves in a position to have to worry about it later, when with some adjustments and a little sacrifice now, we could avoid any worry at all.
Stop Going into Debt
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.
“There is scarcely anything that drags a person down like debt.” – P. T. Barnum
When the amount of your bills is greater than your income, it’s safe to say…you’re in trouble! The very simple concept of having more money going out than you have money coming in doesn’t take much to figure out. It’s when you find yourself in situations like this that you’ll only keep adding to your debt whenever you spend more money than you make. The moment you realize that you’re whipping 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 night (or almost every night), or…heck, you don’t have the cash on you right now so you’ll just pay for it when you get the bill next month! That’s when the first thing you need to do is get your spending under control.
It’s those frequent, everyday small purchases which cause you to “nickel and dime” yourself into that never-ending cycle of debt. You not only need to get your spending under control, but you also have to avoid unnecessary debt! Don’t let those small purchases add up until you realize at the end of the month you can’t pay it all back. If you don’t have the cash to pay for it, then you shouldn’t be buying it and you probably don’t need it. And if it’s something you do need, then you need to re-assess your budget or come up with a plan to save up for it! Under normal circumstances, the only time you should be purchasing anything with credit cards is if you have the funds available to pay for it and its use is strictly out of convenience. Use it as a tool, but not as a means to support a lifestyle you can’t afford. You’ll never reach financial freedom by continually getting yourself into debt that could be and should be avoided. Take control, stick to a budget and watch how your financial circumstances will change for the better!
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