Five Habits to Change before you get out of Debt

Getting out of debt is a challenge. Staying out of debt is a commitment. Sure you can pay off your old debt and get your financial life back in order, but what will keep you from going down that path again? To achieve financial stability, you must rid yourself of those bad habits that originally got you overwhelmed with debt. Here, we will discuss five habits you must change before you can get out of debt and stay out of debt.

Living Beyond Your Means

Regardless of your employment, you only earn a set amount of income each month. This limits the amount of money you have available for living expenses. However, if you use credit cards and loans to pay for wants and needs, you are living beyond your means. While you can exploit these resources for a time, eventually you will paint yourself into a corner and your debt will begin to increase. You must put an end to spending in excess of your earnings to keep your debt levels under control.

Credit cards should be used for emergency purposes only. This fact can not be stressed enough. Using credit cards to pay bills and buy groceries will surely put pressure on your finances. You will end up paying more for things you need to live comfortably, provided you make timely payments. Live on your income, budget wisely, and keep your cards in your wallet or purse.

Using Credit Instead of Cash

Using a credit card is easy. Paying with cash is smart. Don’t fool yourself with the “buy it now, pay for it later” mindset brought about by the ease of credit card usage. Why wait to pay if you have the money handy? What makes you think you’ll really want to pay for it later? Again, keep the cards in your wallet and opt for cash.

Paying Debt with Debt

If you’ve accumulated debt already and are looking to use your credit cards or take out a loan to take care of it, that’s a bad idea. Doing such a thing makes no sense. Transferring balances from one debt to another provides no relief. It just enhances it. Whenever you use a credit card or loan to pay a debt, transfer fees and origination fees may be incurred. These additional fees only make your debt mountain higher. Make a budget with your income and set some cash aside to decrease your debt the old-fashioned way.

Pay Debts on Time

This is a habit you should adopt. Paying your bills on time saves money. By making payments late, you incur fees you probably didn’t even know existed. Not only are late charges added on, but, as with credit cards, interest rates can increase greatly. This act can also encourage other creditors to increase your interest rate. Do everything in your power to make sure creditors receive the payments due on time.

By changing your spending habits and managing your finances better, you have a chance to get out, and stay out, of the debt hole. Live within your means, create a budget, and use credit only when it’s absolutely necessary. Also, remember that if you can’t afford it now, you probably don’t need it. Make these simple changes and take control of your financial life.