In order to climb out of debt and get yourself to a more financially secure and stable future, it’s important to avoid common mistakes that can derail and postpone your progress. The decision to get out of debt can seem overwhelming and confusing, especially if you’re not totally sure how you got there in the first place.
1. Impulsive Spending
This is an important one for people getting out of debt, as impulse spending is often driven by emotion. If you’re guilty of impulse buying, you’re not alone. This is a common mistake for many people, and it’s easy to overlook the seriousness of this terrible financial habit.
Instead of frivolous spending, take some time to evaluate every purchase and decide if it’s a need or a want. Is it something you needed before you walked into a store? If not, then you’re probably better off without it.
While impulse spending can be a hard habit to break, it is possible. Try postponing purchases for items you didn’t know you needed. Make note of the desired item, and if in a few days you are still thinking about it, find a way to work it into your budget. Chances are good you’ll have changed your mind, though. Resisting the urge to spend will give you the confidence to say NO more often to impulse purchases in the future.
2. Buying a New Car
Many financial experts advise against buying a new car because of depreciation. If you need a newer vehicle to replace one that’s breaking down, consider purchasing a used car instead. If your vehicle is paid off and still runs fine, resist the urge to upgrade just because you want the latest model. Instead, put the money that would go towards a car payment into a savings fund.
3. Paying Full Price
With so many deals and coupons available on the internet today, there’s very little reason to ever pay full price for anything. Before making any purchase, always check for coupons or discounts first, even on food items. Consider shopping at thrift stores or garage sales versus department stores. If you get into the habit of saving money on purchases, this will help move you towards getting out of debt and staying there.
4. Not Having an Emergency Savings Fund
If you don’t have an emergency savings fund, your debt can really take a hit if something expensive unexpectedly happens. There are many things that can happen that will cost you money immediately, from car repairs to home repairs to health related concerns and needing to take time off work unexpectedly for a variety of reasons. You can lessen the crushing effects of these circumstances by focusing on the importance of setting money aside-no matter how small that amount is. Some money will always be better than none.
5. Not Cutting Expenses
It’s going to be impossible to get out of debt if you’re still trying to keep up with the same lifestyle that helped get you there. Many people want help getting out of debt, but they aren’t willing to make the necessary sacrifices in order to make it happen. Learning to live below your means is key in having the extra money needed in order to start paying off debt.
6. Not Having a Budget
If you don’t have a budget, and you aren’t tracking your spending, it will be very difficult to hold yourself accountable and make any gains. A good first step is writing down every cent you spend for a month. Look at what you can cut, look at where you can save, and focus on making small steps to improve your financial situation. Sacrifice now will only lead to better stability later.
7. Going It Alone
If getting out of debt seems hopeless or impossible, stop beating yourself up-you don’t have to go it alone! Contact Safe Money Partners for guidance on how to create a debt elimination strategy that will help you pay off your debt and become more financially secure so you can start living your best life.