Debt problems can creep up on you surprisingly quickly, often leading to panic, confusion and a certain degree of denial. Some people in debt have no idea where their financial problems came from, and facing up to the true cause of debt can difficult. Also, if you don’t know why you are in debt, fixing the problem becomes even more difficult.
Identifying the spending habits that caused your debt problems can help you to solve them. Take a good look at your spending behaviour and ask yourself:
Do I spend more than I make?You might think that it isn’t actually possible to spend more money than you bring in; the funds just aren’t available. This isn’t true, as there are methods of securing extra money – overdrafts, borrowing from friends, dipping into your savings – but these always catch up with you.
Do I spend money I don’t have?This relates to credit, as using loans and credit cards equates to spending money that isn’t yours. This is useful in certain situations, but using this borrowed money to pay off bills is only starting off a chain of debt.
Do I use credit for everyday purchases?Credit cards and their ‘buy now, pay later’ appeal mean that you may often use them to buy everyday items such as groceries and clothes. This is creating more debt in the form of a daunting monthly credit card bill, so always use cash for these purchases if you have it.
Do I use debt to pay off debt?Using a loan to pay off another loan is never a good idea; it creates a debt spiral that is difficult to get out of.
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