If you find yourself scrapping for money and realizing you’re in the tumult of a debt crisis and it may be time to reevaluate your financial habits. There’s an assortment of bad habits that ultimately keep you in debt and we’re here to point them out. Here are ten bad habits that will keep you in debt.
1. Not having a monthly budget: Before you go ahead and make any purchases, sit down for a second and see how much you should be spending. First, put together a list of your monthly expenses and see how much you already pay per month. Second, depending on your costs, set an overall budget for the rest of the month. Finally, try not to exceed this amount and enforce the notion of spending less than your budget. If you save properly you’ll come out on top at the end of the month with some extra money. You can either use it for next month’s budget or set it aside and continue to save.
2. Paying bills past due date: Make it a habit to pay your bills on time if you don’t already. A big issue of missed bill payments is the actual due date. Individuals may not be able to pay their bills on a designated date. If you’re one of those individuals, see if you can adjust your due date. Missing due dates may lead to late fees up to at least $35 per month. It may not sound like much, but if you’re late every month you’ll be wasting an extra $420 for the year. Late payments can also affect your chances for benefits or even lower monthly payments from some companies. Lastly, late payments lower your credit score, and you always want to avoid a low credit score.
3. Not reviewing your monthly bills: Always take the time to review your monthly bills. Although it may seem like a lengthy process at times you need to make sure companies are not charging you for features you don’t use. Whether it’s for cable, Internet or phone make sure the features you use are the only features you’re being charged for. Companies will slip in certain charges that tend to go unnoticed. When you review your bills you can spot these charges and make adjustments accordingly. This allows you to benefit from what you purchased and save some extra cash.
4. Paying only the minimum required payment: You may believe you’re in the clear once your monthly payment has gone through. However, if you only pay the minimum requirement each month, it may take you quite a while to get rid of your outstanding debt. This can also lead to fortunes being spent on interest. Always try to spend more than each month’s required amount to improve your chances of reducing debt. Also, it doesn’t hurt to administer multiple payments each month. Even if the amount paid is relatively small, multiple payments can greatly increase the chance of getting rid of excess debt.
5. Getting credit cards without cashback: If you have the opportunity to partake in cashback credit cards take advantage of it. It doesn’t hurt to receive cash for the items you purchase. Most credit card companies will send money your way if you spend a certain amount per month. Some will require you to make purchases pertaining to certain categories in order to receive cashback. No matter how you receive cashback you can either save that money or go ahead and spend it. However, in order to fully take advantage of cashback features and save, you need to pay down the balance in full and on time every month.
6. Shopping for groceries without coupons: Grocery shopping can be pretty pricey especially when you buy enough food to fill your pantry. To reduce your grocery expenses do not buy in bulk. Before you head to your nearest grocery store put together a list of foods you truly need. Putting a list together will eliminate food waste allowing you to save even more. After your list is complete, go online and search for grocery coupons pertaining to the foods on your list or store you shop at.
7. Shopping with a credit or debit card: Purchasing items with a credit or debit card can lead to excessive spending. Before you know it you’ll be facing debt and wondering why you allowed yourself to spend so much. A simple solution to excessive spending is to keep your card(s) at home. Carry cash instead because this will force you to stick with a budget and prevents you from withdrawing extra money. Carry how much you think you will need and save the remainder for future use.
8. Buying brand name drugs only: You see the commercials all the time, the colorful boxes entice you to purchase them but when you get home you question why you spent so much. Most brand name drugs serve their purpose but they’re also pretty expensive. You don’t have to spend your money on brand name drugs though. Depending on where you shop, the store will supply its own generic drugs that serve the same purposes as a brand name does. They usually contain the same ingredients and provide the same relief. The only difference between the two is the pricing. When making your decision always go with the generic drug. You’ll feel better knowing that you saved more at the register and relief is on the way
9. Buying new instead of old: In today’s society, newer products are a necessity and the desired choice. However, newer products are expensive and released throughout the year. Instead of investing in a new version, look into purchasing an older model. Chances are there won’t be any major differences between the two except for the prices. When a new product is released, prices of the older models decrease, allowing you to score on a great deal. Check to see which months new products are released so you can capitalize on discounted prices.
10. Missing out on tax deductions: When it comes to paying taxes people miss out on countless opportunities of receiving extra tax deductions. Before you submit your taxes, review them again and make sure you received all proper deductions. A few deductions some miss out on are points paid on home refinancing, sales taxes on new vehicles, state sales taxes or out-of-pocket charity. Check online to see if there are any other deductions you can invest in before you submit.