Better Financial Health: Bad Money Habits to Ditch Now
Most people are more willing to talk about weight and romance than money. But we’re breaking the taboo and having the awkward conversation now. If you’re determined to get your financial life together for the years to come, get ready for some money talk. Let’s start with the habits you need to curb.
Making Credit Cards Your Best Friend
Debts come in two kinds: good and bad. The good ones are those you can feel a little less guilty about because they are used to purchase or acquire appreciating assets, like a business, a home, and education. Meanwhile, debts from credit cards are definitely on the other side of the fence.
While useful at times, especially when you ran out of cash, these little plastics can do your financial situation more harm than good. People are likely to overspend when they’re paying with a credit card rather than cash. It gives us the illusion that we’re not losing money because, after all, we’re not taking out cash from our wallets. The truth is, when we pay with a credit card, we’re spending money that we don’t have, plus interest.
So what should you do with your credit cards? Hide them if you must, but don’t cut or throw them away as they might prove useful on rare occasions. Moreover, refrain from calling your issuers to close your accounts; doing so might hurt your credit score.
What you should do instead is stop yourself from using them for everyday purchases, such as food, gas, and clothes. It won’t be easy, even more so if you’re relied on credit cards to get by. However, once you decided to get your finances together, giving up the cards’ promise of convenience is a sacrifice worth making.
Going into Debt with Zero Plans
All kinds of debts, good and bad, should be accompanied by a management plan. The tricky part about financial obligations is, they don’t seem like a big deal at first. You somehow manage to convince yourself that you’ll be able to pay them off sooner or later.
Unfortunately, that’s not always the case. Before you know it, you already owe several lenders without a single idea of how to pay them. And so, you feel overwhelmed and defeated. This is why planning goes a long way.
Some people use good debts, like home and business loans, as a stepping stone to a more stable life. There’s nothing wrong about that as long as you don’t dive into debt without proper preparation. For example, if you’re goal is to buy a house in Mcallen, a mortgage company might be able to help you explore the best financing options for your situation. From there, you’ll get a foresight of how you’ll pay for the home you have your eyes on.
The future is unpredictable, but having a specific and realistic plan to pay your debts is better than winging it. Should you encounter events you didn’t expect, tweak your plans. You don’t have to start back from zero.
Leaving Your Finances to Chance
One mistake that we all made at one time or another is mindless spending, which happens when we fail to track our expenses. We’re clueless and wonder where does our money go. Why is it so hard to make ends meet?
This problem leads to a whole lot of money issues. When we don’t keep an eye on our expenses, we overspend. When we shell out more money than we should, we struggle to stay within the budget. When we feel we never have enough money for our needs, we go into debt. It’s a snowball effect that can be prevented if we write down our purchases.