According to CHOICE, almost half of all Australian households are in some kind of debt. The reality is that many of us might never escape debt is because we spend irresponsibly and live slightly beyond our means. Here are four habits to break if you want to be debt-free.
1. You don’t track your spending or have a budget
Making a realistic budget that you can stick to long-term is the most efficient way to reduce expenses and pay off debt. As you begin to see your savings grow, you will also feel more confident about your financial situation. Creating a budget might appear to be a big task but it will be worth the effort.
2. You spend money to feel good
We all know the feeling of spending money on nice things. In our society, we are encouraged to view spending money on ourselves as an act of self-care. This is where the flawed idea of ‘retail therapy’ comes in. The truth is we’re doing ourselves a disservice by spending our hard-earned dollars on items we don’t really need – or, in some cases, even want. We might also be using shopping to cover up an underlying issue in our lives, so it’s better for you – and your bank account – to curb this spending.
3. You spend time with the wrong people
You’ll never get a head-start on your finances or pay off your debt if you surround yourself with people who want to live a lavish lifestyle. ‘Keeping up with the Joneses’ is detrimental to your pocketbook. This doesn’t mean you need to stop being friends or going out for dinner, but you should be clear about how much you’re willing to spend on nights out, birthday gifts and coffee dates.
4. You have a ‘someday’ mentality
Someday, when the holidays are over, you’ll write a budget. Someday, when you have a better job, you’ll pay off your debt. These empty promises are another way that we sabotage ourselves financially. When it comes to the boring subject of money, the timing will never be right. So, instead of adding to your DVD collection, make a real promise to yourself today to do one thing that will help to get your finances in order. Just one step in the right direction can give you the confidence to change your money situation for the better.