6 Spending Habits To Avoid Like The Plague!
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Your spending habits will ultimately land you in two completely different realities:
1) Increased wealth and abundance
2) Increased debt and struggle
Here are 6 common spending habits that often lead to increased debt and financial struggle and are best avoided like the plague.
1. Spending more than you earn. It’s actually easier than you may think. Living beyond your means is a recipe for financial disaster. This habit if left unchecked can leave a gaping hole in your finances for many years to come – a hole that needs to be filled from somewhere, such as dipping into savings, using credit more often, or borrowing from others. Before too long, those sources will be exhausted as well. Anyone who wants to bring their spending under control must have a financial plan that helps them live within their means.
2. Purchasing consumable goods with credit cards. Some individuals use credit cards to make everyday purchases such as gas and groceries, pay utilities, and pay the balance off each month. The individuals have a spending plan in place and are disciplined in paying the monthly balance. Unless you are someone who can do the same, avoid paying for consumable goods with credit. It’s too tempting to not pay the bill for things that have already been consumed. Unless you have no other option, pay for your consumables with cash.
3. Not having a budget or spending plan in place. It’s a term many consider tedious and unnecessary, but nearly anyone can benefit from some sort of budget, or spending plan. Especially in a struggling economy, it’s necessary for most people to budget for future unknown expenses, since they are certain to come around. Think of a budget as a your guide to being smart with your money. They keep you honest about your financial situation and can help you plan a pathway out of debt and into abundance.
4. Squandering low interest balance transfer opportunities. While the idea of transferring high-interest card balances to lower-rate cards is an effective idea in theory, the key is to avoid putting additional charges on the card and paying off the balance before the introductory rate expires. Unfortunately, most people continue to charge and end up with more debt. Another factor to be wary of is that some cards apply a different rate to new purchases. Make sure to read the fine print every time.
5. Not making your credit card payments on time It doesn’t seem like that big a deal – a $27 late fee here and there. But that’s another $27 that could have been applied to your balance, reducing your interest. If the payment is going to be late, contact the creditor and ask them to wave the late fee. Make sure that the information shows up correctly on your credit report.
6. Not paying yourself first. As mentioned above, failure to set aside a fund for emergencies can lead to financial ruin. It may only take one incident, such as a car accident to put you out of work and force you to pay for your living expenses with borrowed money. Make sure to pay yourself and set aside a nest egg for emergencies. Consider using an online banking savings account with direct deposit to build a stash of cash in your online banking account. Online banking accounts generally pay out higher interest rates. The money is still accessible but because it’s harder to get your hands on, it’s a solid choice for building up savings.
Remember, there is good debt and there is bad debt. Bad debt is when you use borrowed money that you cannot afford to repay before the interest kicks in either to live on or to indulge. Good debt is when you use borrowed money to purchase assets that can either grow in value, provide you will additional cashflow or both.
The key to financial freedom is to nip your bad debt in the bud, which will improve your credit scrore/rating and then use good debt to increase your wealth and abundance by making the leverage of other people’s money work for you and not against you.
Work on building assets, not liabilities. Life is too short to be servant to a lender!
About The AuthorJames Thomas is the Founder and Senior Editor of Self Empower Magazine and is dedicated to helping people increase their health, wealth and happiness. |
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