How to Change Your Spending Habits to Avoid Debt

If you want to avoid debt you will most likely have to change your spending habits. The majority of people in the world today are used to spending more than they make. If you want to avoid racking up large debts and stay in control of your financial situation, there are a few things that you can do. Here are a few tips to change your spending habits and avoid debt.

Buy What You Need

One big problem that a lot of people have is the need for instant gratification. They want everything that they can imagine and they want it right now. If you want to avoid debt, you should only buy the things you need until you can afford some of those nicer things. Assess each purchase before you make it. Ask yourself if you really need this item to get by. If you are not financially independent yet, you need to scrutinize each purchase that you make.

Use Cash

Many people today forget that cash exists. They use cards and checks and whatever other spending methods are available. While cash might seem a little outdated, it can still be very effective. Pretty much every store out there will still take cash. Using cash allows you to spend only what you have. Using credit cards will obviously allow you to spend more than you have. Even checks and debit cards will allow you to spend more than you have. Many banks have overdraft protection in place that will allow you to spend more than you have in your account quite easily. With cash, you can only spend what you have in your hand. Therefore, once it is gone, you are done spending. Setting rules to use a certain amount of cash each week will help you stay on top of your financial situation.

Don't Finance Everyday Items

When it gets to the point that you are financing your groceries, you are in trouble. For everyday items like groceries, gas, and household items, you should not have to finance them. The only reason that this would make sense is if you have a great credit card with points and you have the cash sitting in the bank. Then when you get the statement, pay off the card immediately. However, you should not just put everything on your credit card and pay it off in installments. Paying 25% interest on your groceries is crazy. Just pay for them with cash and be done with it. If you can't afford groceries, you need to change some other things in your life to make room for everyday expenses.

Cut Back

Many people would be shocked if they looked at how much money they spend on unnecessary items. Many financial publications have elaborated on how much it costs you just to buy your morning coffee and bagel. If you are spending five or six dollars every morning on these items, consider how much money you are wasting. This tends to spiral into other areas in your life and cause debt.


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