Managing Debt

5 Habits Leading You Into Debt

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This article originally appeared on LearnVest.

You might remember a particularly fuzzy story in The Huffington Post that came out last year around Christmas, called “The Real Reason You’re Single.”

Although much of the advice in the column was controversial or at least unpleasant to read, the thesis came down to this: You can’t blame everything on the world, your circumstances or other people.

In a similar but different vein, today’s LearnVest Daily is dedicated to all the excuses we’ve ever made for why our finances aren’t everything we’ve dreamed:

  • Our jobs just don’t pay enough
  • Our friends are bad spending influences
  • We’re too deep in debt to ever get out

In response to those, we bring you five reasons you’re heading into debt … when you shouldn’t be.

You Put Your Entire Paycheck in Your Checking Account

Of course, you should have a checking account, but depositing all your income straight to checking sets you up to overspend and sideline your savings goals. After all, the money is right there, ripe for the spending, and socking cash away for the future requires transferring it separately to your savings account.

A better solution? Set up automatic deposits straight from your paycheck into your various savings accounts. It’s called paying yourself first, and it’s much harder to miss money you’ve never seen in the first place.

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You Spend on Stupid Stuff

Although we’re a financial website, we actually think you should spend money … on the things that will actually make a difference in your life. Spending on a meaningful vacation or a clothing item that will revolutionize your wardrobe? Totally worthwhile. Spending extra on things like your electricity bill or your medicine cabinet? Totally stupid.

Prioritize what matters most to you, then cut out the rest of the filler in your budget. For extra help on cutting costs around your house and throughout your life, check out LearnVest’s free, newly revamped Cut Your Costs Bootcamp.

[Related Article: How Do Debt Relief Options Affect Your Credit?)

You Don’t Have Any Goals

You’re much likelier to save if you have something to save for, especially if it’s something important to you. Get some emotions on the line by thinking of specific reasons you’re working so hard at your finances. Are you trying to save up for a house someday? A family? A new car? A much-needed vacation?

Put everything in perspective, and give yourself something to work for, by creating a vision board, which you can fill with images and words to illustrate your ideal life. This will help you realize what’s most important to you; you might even be surprised at the images that appeal to you! Here’s how to make your vision board.

You’re Paying Your Debts Wrong

Even if you’re responsibly paying off your debts, you could be keeping yourself down if you’re paying them in the wrong order.

Don’t divide your payments equally among all debts, like credit card debt or your student loans. Those with the highest interest rates grow fastest, so focus on the most toxic debts first. How do you know which those are? We created a whole model for you to spell it out. Check it out here.

You’re a Defeatist

We know how it goes: It starts with a small spending gaffe. But then you figure you’re off the wagon, anyway, so you let yourself keep buying more, and, before you know it, you’re in the depths of a bad spending spiral.

This is a common way of thinking. Once you’ve screwed up your budget, it’s easy to feel helpless because it’s hard to imagine how you’ll get yourself back on track. But that thought pattern is one of the easiest ways to blow through a budget and just keep blowing on past all your financial goals.

To get out of a spending spiral, you need to stop dwelling on the negative and encourage the positive. Here are eight ways to pull yourself out of a spending spiral.

Want to see four more habits that are leading you into debt? Check out the rest of the article on LearnVest.
Related Articles:
10 Bad Habits That Are Actually Good for You
10 Things You Didn’t Know About Your Money
Image: Alan Cleaver, via Flickr

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  • Lane

    Rule: “Don’t hang up. And when they do, call then back.Write down every customer service agents I.D.s and the times you spoke to them. Ask for any reference numbers, especially if an order or change is placed.”

    No, it’s not a conspiracy. “Customer Service” doesn’t mean what it used to, to make us happy. Today it means to service our wallet; up-sell & bundle. I’ve saved my partner over $100 a month this week. First up, cable t.v. They were charging him the full rate of $102. Second, internet, 12 mbs for $80. See, we lived together and I wanted my own place. We transferred the “contracts” from me to him. I knew they were going to make it easy, but also knew the bills were not going to be the same. We called both companies, documented all the names, times and asked for I.D.s When the bills came, none of the rates were contract rates. Both providers pulled the same scam. My partner wasn’t allowed new customer savings, because he wasn’t a new customer, but he also wasn’t eligible for my discounts, because the original contract wasn’t with him. So they had him over a barrel. But I worked in the industry for some time, and know nothing is in concrete. He put me on both accounts as an authorized “user” and I started making calls. 6 hours total on the phone. Yes, I wasn’t nice. Yes, I got “disconnected” multiple times. I simply repeated over and over what I wanted and what was promised. But if you know their language, you will succeed. In the end, he now pays $35 for internet and $40 for t.v. I knew what I was doing when I signed up with two different companies, I wouldn’t be forced to bundle. Most of these companies have inexpensive stand alone services, called “single item bundles”. (Also, all land-line providers have to have a basic phone option, for 911, they just don’t have to advertise it, and is around $12 a month. Get a calling card and your good to go.) They have a high advertised cost only to increase how much you can save, it’s a total scam, no one pays, or should be paying $80 for 12 mbs internet. They offer these rates, usually non-contracted, in hopes their “customer service” machine, mailing & emails or worse, account changes, will steer you into a bundled deal.

    When I worked for a cellphone company, “customer service” meant making the customer happy, The company’s CSR motto was “Credit & Educate!”. I credited many customers’ cellular minutes, sometimes in the hundreds of dollars. Then I would educate them and go over their contract, even reminding them the call was recorded and my notes long. If that same customer went over minutes again, they wouldn’t call back, they knew they had been credited and educated. In the end, both win. The customer isn’t mad at the company and they more than likely called back and increased their rate plan, which extended their contract with the us. Win Win.

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