While many of our bankruptcy clients have found themselves in a crippling financial situation due to unexpected medical expenses and overwhelming student debt; bad spending habits can also be a contributing factor.Credit cards are so easy to use. And once you have reached the financial limit of one, it is relatively easy to get another one so your spending can continue.Most major businesses offer credit cards to encourage spending and retail loyalty. Gas stations, bookstores, retail outlets, home improvement giants and even cheese basket companies offer their customers the option of creating a credit card account.
Add these accounts to your already maxed out Visa, MasterCard, Discover and Amex and you have a potential financial crisis.
How Do You Break Bad Spending Habits?
1. Keeping spending within your means. This is pretty self-explanatory. If you are spending more than you make each month, you are bound to be creating bad spending habits. Create a budget and stick to it. If you are unable to do that, you’ll need to reassess one of two things to see where you will need to make changes:
a. Your income
b. Your expenses
2. Use cash, not credit. Whenever possible, use cash to make purchases. Save your credit cards for large, planned purchases and use your cash or Debit card for gas, groceries and other necessary purchases. This will help you stay within your means each paycheck.
3. Assess each purchase before you make it, not after. So much of keeping a budget is similar to eating healthy. If you have ever struggled to eat healthily you know that there are several simple rules:
· Eat only when hungry
· Plan your meals in advance
· If you bite it – write it – keep track of your intake
· Measure and celebrate your success
These same ideas can be applied to your financial habits.
· Purchase only what you need, when you need it.
· No impulse buying – assess each purchase before you spend the money to determine if you really need it
· Keep track of your expenses even that pack of gum you bought when you were paying for gas. Those small dollar purchases can add up very quickly.
· Review your budget on a regular basis – keep track of your credit card balances and celebrate (in a non-purchasing method – your success)
4. Ask yourself; is this a necessity item or a “nice to have” purchase. We have talked about this concept in several articles before. It is important to identify what purchases are really necessary and which are not if you want to reduce your spending and your debt. Check out the following articles:
5. Communicate your new spending goals with family and friends. This last tip for breaking bad spending habits involves a little honesty with your close circle. Let your family and friends know that you are purposefully working on reducing your debt and creating better spending habits. Let them know that this will mean you won’t be able to go in on season tickets for your favorite sporting team this year or seats for the local symphony. You’ll be finding more creative ways to celebrate birthdays and holiday rather than using credit cards to buy gifts you can’t afford. While you would love to go out to eat every Friday, invite them to your home for a home cooked meal and game night. Being honest with those you love will help them understand why you are choosing to be a little more financially aware. If your family and friends know that you are truly serious about trying to get your spending under control, they can be a strong support group for you.
If you have created bad spending habits and need to make a change, you might want to ask for help. Give us a call. The first consultation is always free.
Southern Illinois Bankruptcy Attorney law firm Bankruptcy Advocates is located in Carbondale and serves a wide geographic community including Carbondale, Murphysboro, Marion, West Frankfort, Johnston City, Benton, Herrin, DuQuoin, and Pickneyville. We are a debt relief agency. Our southern Illinois bankruptcy attorneys help people file for relief under the Bankruptcy Code. The first consultation is always free. Give us a call at 618-549-9800 or email us at [email protected] to speak about your case or legal matter. Convenient appointment times are available.