Your financial habits play an important role for a successful financial future. Good spending and saving habits are the keys to reaching financial success. Check this presentation that shows 7 bad financial habits you should break to avoid the debt trap.
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7 Bad Financial Habits That Can Lead to Debt
Impulse buying can get you into debt. When you make impulse purchases, you use a credit card as you may not have extra money for the unplanned purchase. And, if you donâ€™t pay off the credit card balance, you are bound to get into debt.
Only buy what you need! Remember this whenever you are about to make impulse purchases.
Using Credit Cards for the Points
Reward credit cards encourage you to spend more. Using your credit card just to earn those tempting reward points can lead you into debt.
Use your reward credit cards sensibly. Going into debt just for getting credit card points is not worth it.
Trying to Compete Against Friends and Neighbors
Competing against friends and neighbors can lead you to take poor spending decisions and cause overspending.
When you see your friend or neighbor having an expensive lifestyle, remind yourself of your goals and priorities.
Shopping to Feel Good
Shopping to make yourself feel good is actually bad for your financial well-being. Spending in order to feel better can become addictive and hard to break.
Check your emotions before you buy anything to avoid emotional shopping. Think whether you really need it.
Leading an Expensive Lifestyle
It becomes very tempting to have an expensive lifestyle when you are earning more. Buying a new house, car, or expensive vacation can land you into a financial trouble in case you can't afford it.
Make sure you only buy things you can afford. Going into debt just to lead a rich and luxurious life is not advisable.
Paying Only the Minimum on Your Credit Cards
Making only the minimum payment each month on your credit card is bad for your financial life. You will be accruing more interest and piling up your debt.
Remember you owe the credit card balance, not just the minimum payments.
Not Planning for Debt
If you are not planning how to pay off your debt, you will find yourself owing several creditors. This will lead you into debt trap.
Create a plan to pay off your debt. Start with the minimum balance and keep paying minimum until you can tackle that balance.
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