4 Common Habits That Are Keeping You in Debt

1. Not Having a Monthly Budget The golden rule; know where your money is going. If you are shocked or maybe confused by your bank balance at the end of each pay week as you desperately try to find some sort of mistake, it’s probably because you don’t budget for yourself.
No, you do not have to be finance whizz to make a budget, it’s quite simple really. The process involves examining your expenses each month and setting a limit. First, allocate funds for your fixed expenses such as bills, then allow yourself a small portion for variable costs such as eating out or clothing. Finally, put the remainder into savings.
Budgeting is a biggie, it ensures that you do not run out of money and is the foundation for setting and achieving your financial goals.
2. Paying Only The Minimum Required Payment

Some credit cards or other loans allow you to pay only 1%-3% of your balance each month, an extremely tempting offer if you’re on a tight budget. With the average charge of 15% interest rates, minimum payments will result in maximum prices.
Try cutting back your budget on other items so you can afford more than the minimum payment. For example, spend less on buying lunches or ditch your gym membership in exchange for jogging.
3. Over-Draft

Over-drafts seem to be the go-to resolution during financial flops. Before you arrange an over-draft, first consider the hidden fees that follow. For example; establishment fees, monthly service fees, interest fees and exceeded limit fees. It is no wonder so many of us find ourselves stuck in over-draft for years on end.

So why do we continue to use them? To put it simply, it’s quick, it’s easy and we feel like we are in control. However, once we are in the habit of remaining in over-draft, it can get increasingly out of control!

The key to avoiding overdraft is of course, budgeting. You should always have enough money saved for any emergency expenses that are sure to appear unexpectedly.
4. Not Paying Your Bills on Time

It can be easy to forget and sometimes difficult to afford. Paying your bills should be your priority as forgotten payments are the one expense that is putting you in more debt. Bills are approximately the same price and due the same day every month, so they are easy to budget for. As soon as payday comes along, put funds aside for bills, even if it leaves you with less money to spend on lunches or shopping trips!

If it’s your memory or time management that’s causing late payments then you need to take the necessary steps to ensure you do not forget. Schedule your bill payments as soon as you receive the statement in your inbox. The email may state the maximum amount of time you have until the payment is due, causing you to deal with it at a later date, resulting in forgotten payments. Put a reminder in your phone so you do not forget!

Disclaimer: The above information is general in nature and not intended to be financial advice. You should consider seeking professional advice before following any suggestions in this blog/website.

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