There are many different things that can affect our finances negatively, but there are a few actions that we can take to guarantee that we stay in debt forever. Some of these things are easier to accomplish than you would think and many of these actions are things that we do unthinking, never realizing that are actions are causing financial devastation until it is too late. If you really want to destroy your financial security, here are some good ways to do it.
Carrying A Credit Card Balance
Carrying a credit card balance is one of the best ways to guarantee that you will stay broke for the foreseeable future. Credit card balances cost a fortune in interest payments, service fees and account fees, sucking up a great deal of your disposable income and putting you at the mercy of the credit card issuer. Many people spend decades trying to pay off credit card debt, spending thousands of dollars in additional money to pay off purchases made long ago.
Paying Too Much For Your Largest Expenses
You are never going to come out ahead financially if you are paying too much for your largest expenses, such as your mortgage payment, your rental payment, or your car payment. If you are consistently spending more than 30% of your take home pay on your housing or more than 10% of your pay on a vehicle, you will find yourself chronically short on cash and having difficulty saving. In these cases, the only other option you have is downgrading to a place that is more affordable on your salary.
Confusing What You Want With What You Need
There are very few things that we as humans really need, like food, clothing, and shelter. The problem comes in when we start confusing the things that we actually need with the things that we merely want, like cable television, multiple pairs of sneakers, or dinners that we don’t have to make. Mistaking the things that you want for the things that you need is a surefire way to ensure that you continually spend more than you have to.
Focusing On The Short Term
Businesses are great at getting people to focus on the short term costs of a purchase instead of the long term costs and consequences. For example, on a new car loan, the new payment may be lower than what you were paying for your old car, but you are not taking into consideration that you will be paying that new car loan for a longer period of time, resulting in a significant increase in expenditure. Companies are experts at diverting you from looking at the total cost of the items that they are selling and not calculating the true cost of the items that you are buying is a good way to remain broke for the foreseeable future.