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Bad Money Habits that Keep You In Debt by Nikki Willhite How many bad money habits do you have? It you are like most people, you may not even be aware of how much money you waste each month. When you actually keep a record of ALL your expenses for one month, it can be quite a surprise to see where your money has gone. When you are trying to get out of debt, you need to get very strict with your money. You need to be aware of where each dollar goes. You have to separate the wants from the needs. Even if you do not have debt, bad money habits can keep you from accumulating financial security. If you want to become good with money, the first thing you need to do is to be honest with yourself. You need to write down where every dollar goes for one month. If you are spending more money than you have coming in, or if you are not saving 10% of your income, you need to make changes in your spending habits. HERE ARE SOME COMMON BAD MONEY HABITS - Banking fees - Late charges - Interest on credit cards - Excessive eating out - Expensive beverages - Manicures and pedicures - Expensive hair cuts - Impulse shopping - Leasing or renting cars or other items If you have the money, then some of the above items are not a problem. However it is all too common for people that are deeply in debt to continue behavior that they cannot afford. Once you realize your bad money habits, it is up to you to avoid them. Sometimes you have to change your routine. If a morning stop at the donut stop is tempting you, change your route to work. If you are having problems with late fees, you need to get more organized. If you are doing too much shopping, you have to figure out what is triggering it, and find another way to deal with it. Everyone should have a savings fund so they don't have to worry about unexpected expenses. You also need to be prepared in case you lose your job. You need 6-8 months of money to get by until you find employment. Plastic money is a lot easier to spend than cash. If you put away your credit cards, and just use cash, you will spend a lot less money. I use to love my charge card. I would put everything I could on my card just to get the cashback award. Then I heard the statistic about how you spend less money when you pay cash.   So our family switched to cash only, or debit cards. What happened? Our spending plummeted. We became better not only about making buying decisions, but in spreading them out over a longer period of time. If you have credit card debt, try and pay it off as quickly as possible. There are varying opinions on the best way to do it. I prefer the snowball method, because you see results quicker and keep motivated. With the snowball method you pay off the smallest credit card debt first, making the minimum payments on your other cards.  When that debt is paid off, you take the money you were applying to the paid off debt and add it to the money you are paying  on the next lowest bill. You work as hard as you can to pay off one bill at a time, and then you move to the next.  Your payments increase as you pay off each bill. Only in rare circumstances should you do anything like refinancing your home to pay off credit card bills. Habits are strong to break. You will fill up your credit cards again, plus have a higher mortgage.   Getting out of debt requires work and sacrifice.  Get rid of your bad money habits, and learn to be frugal.  It may take some time, but you will get there and it will be a great place to be. About the Author: Nikki Willhite, mother of 3 and an interior design graduate, has been writing and publishing articles on the topic of frugal living for over a decade. Visit her at www.frugalhappyfamilies.com - where you will find hundreds of frugal living tips and articles. Frugal Happy Families- more than just money!

 

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