How to Break Habits that Lead to Debt
by
Niyi Adeoshun

A habit, good or bad, is a recurrent, often unconscious pattern of behaviour that is acquired through repetition. Some of our financial habits lead us into debt. The best way to avoid debt is to stay away from the habits that lead to it.  If you can identify those habits, you can begin to tackle them or avoid them entirely. Below are some of the habits that can cause you to accumulate debt.

1. Continuously transferring balances from one credit card to another. 
Even though it might make sense to take advantage of low introductory interest rate, it doesn’t make sense to keep transferring balances to juggle debt.  Using balance transfers only allows you to avoid interest on your debt for a short time.  If you are ever without a credit card to transfer balances to, you’ll end up in a messy financial situation.

2. Making late payments costs more than you think. 
Not only are you required to pay a £12 late fee – that could have been used reduce your balance – your interest rate will likely default to a higher rate, costing you more to carry a balance on your card from one month to the next.  Because of a universal default clause in your credit card agreement, your other creditors might begin charging a higher interest rate as well.

3. Paying only the minimums causes you to pay more in finance charges over the long run.  The money you spend paying interest could be used to pay off your credit card balance, put into savings, or used to purchase something nice (and necessary) for yourself.  Instead of paying the minimums on your credit cards, pay as much as you can each month to avoid spending more money in interest charges.

4. Keeping silent when you have financial trouble is not a good idea.  You might be fearful of telling your creditors that you aren’t able to make your payment, but you might be able to get help.  Typically, creditors will work with you in times of financial distress, but you won’t know if you don’t ask.

5. Failing to check your credit report because you are afraid to see what’s on it is not a smart idea.  You should always be aware of who you owe and how much they say you owe them.  Otherwise debt can pile up and before you know it, you have too much debt it is no longer manageable that is, your out-goings have now outstrip your income.
 
6. Not setting a budget can lead to overspending.  Without a budget, you don’t have a firm way of controlling your spending.  The budget helps you to measure your income and expenditure. You can only manage what you can measure; otherwise, it will be easy to spend too much money on unnecessary items.  You should have a budget for all of your monthly, quarterly, and yearly expenses.  That way you don’t have to struggle to pay your bills when they come in the mail.

Niyi Adeoshun the "Money Management Coach" specialises in inspiring and motivating people to live a life of financial-freedom in order to fulfil their life goals.
Niyi has written a report entitled “101 Habits of The Financially Free”. To download your FREE copy, go to http://www.milestonesoffreedom.com
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