A personal financial disaster can happen when you least expect it. Although you may feel that the bank, creditors and every other provider are to blame, a combination of your own bad financial habits can ultimately lead to a debt disaster. It is often the small things that you neglect, like repairs, that push your finances over the edge and into serious debt.
Wikus Olivier debt management expert at DebtSafe says it is time to get rid of bad financial habits. And although it is true that old (and bad) habits die hard, Olivier mentions: “It is indeed possible and never too late to learn something new.” Olivier reveals a few bad habits consumers tend to have and also gives a few tips / possible solutions thereof.
- No Room For Saving
Many consumers don’t even blink when they say they can’t save. Yes, some months are tougher than others but “if you are not saving, you are definitely making more debt,” says Olivier.
Possible Solution(s): Set up automatic transfers for payments (like car insurance, medical aid) and save before you can even consider spending. Try to send 10 to 15% of your total income directly to your savings account after you receive your salary.
- Unplanned Shopping Splurges
Does one of your financial habits relate to the “I want it all and I want it now” lyrics? Shopping splurges can be fun, but in the blink of an eye, instant shopping gratification can turn your finances into a nightmare.
Possible Solution(s): Combat the allure of instant shopping gratification by keeping a log or list of what you need to buy and stick to it. Scout for deals and try not to handle daily pressures of life by making emotional decisions, especially when shopping. Also remember: retailers are not your (or your wallet’s) friends. They often play on your senses – try not to get fooled by a supposed sale or ‘limited edition’, they may not be saving you money at all.
- No Time To Review Statements & Plans/Services
Being busy is part of modern life, but that is not an excuse to ignore the fact that you have spending leaks. You have to know where those leaks are. Also, you may be paying for unused services like your local gym. Being ‘involved’ with your finances also keeps it in check. “Most consumers neglect regular financial ‘check-ups’,” says Olivier.
Possible Solution(s): Put a few minutes aside each month and take a good look at your bank statement(s) by comparing it with your current budget. This will expose those spending leaks that are preventing you from saving a bit extra. Budgeting tools or apps like 22seven can be the easy and ‘on the go’ help that you require, says Wikus. “It is certainly a good idea to review and compare your current providers with others, once a year,” says Olivier. This will ensure that you get the best service and product(s) for the best price. You will also be able to see when you are paying for something you are not using or don’t need (like TV channels/shows or your running club membership).
- Not Sweating The Small Stuff
If you think that the small bills here and there (like repairs) don’t add up, think again. “Sometimes it is necessary to sweat the small things,” says Olivier. “Before you wipe your eyes the tiny repairs have become bigger and when you add up all the costs, serious debt comes swinging your way, unexpectedly.”
Every penny does indeed count and you do not want bills to disrupt your pre-planned budget all at once. Take care of preventive maintenance and move on to the next thing that needs your attention. This can prevent you from getting stuck in an unplanned situation where you have to give out cash to get the geyser, the swimming pool’s leak and the car’s breaks replaced / fixed all at once. Rather avoid this type of dilemma.
- Buy Now, Pay Later
The road to a debt disaster is paved with good intentions. “Buy now, pay later” – it sounds too good to be true, and in actual fact, it is. Using credit can definitely help you, but you should never be reckless when applying for loans, using clothing accounts and swiping those credit cards. This can limit your chances of becoming and staying financially independent says Olivier.
List all your debts and indicate the interest you pay on each debt. Keep track of these payments and add a time frame to specify when you can expect to be finished with a certain debt payment. Pay one debt off first and move on to the next. “It is best to try and avoid debt like credit card(s), overdrafts or clothing accounts. These are bad types of debt,” says Olivier.
Has one or a few of these bad habits made their way to your daily routine? It is not easy to break old (and bad) habits, but it is indeed possible. Take a thorough look at your current financial situation and try to incorporate good habits from now on. This can ensure you to become financially free. If, however, your bad habits have already led to a bit of a difficult debt situation, contact the DebtSafe team. DebtSafe is the makers of new beginnings. SMS your name and INFO to 30898 (at no cost) and get a free debt assessment.