Four Common Behaviours that can lead to Debt
Four Common Behaviours that can lead to Debt
Debt can be the result of an extremely wide range of circumstances, from prolonged and irresponsible spending, to a series of events that can be completely beyond an individual’s control. Recent research found that almost 60 percent of South Africans are struggling to meet their monthly home loan and credit payments, while only 23 percent have any money left at the end of the month. While some of the indebtedness will be the result of external factors, there are also a number of common behaviours that are leading to increased levels of indebtedness not only in South Africa but also around the world.
The truth is that all it takes is one bad decision to pave the way for an ever-growing debt. Below are the behaviours that so often prompt these bad decisions to be made…
‘The truth is that all it takes is one bad decision to pave the way for an ever-growing debt’
-
Buying makes you feel good
One of the biggest problems we face in the modern world is that so many people treat spending money as a kind of therapeutic experience. For those who go out and buy things they really don’t need, there’s almost always an emotional issue that’s driving the behaviour which needs to be resolved.
In other cases, some people must have the best and latest thing, whether it’s the new iPhone, the biggest television or a fancy car. This behaviour, to the extent that it becomes problematic, can also stem from emotional issues, or simply be a bad case of ‘stuff-itis’, in which case, it really needs to stop.
-
Spending money you don’t have
Another common trap people fall into is spending money they know they don’t have yet, but will once they’re paid. Once next month’s paycheque arrives in their account, they then have to pay off the credit card bill for last month’s purchase and pay all the bills, leaving very little disposable income for other things. But instead of paying off the entire credit card bill, people make the minimum monthly payment, and then see something else they absolutely must have, adding to the existing credit card debt.
-
Carrying too many credit cards
Perhaps the most common, but also one of the easiest mistakes to avoid, is carrying around more credit cards than you need. Not only does having too many credit cards tempt you to spend more money than you should, but it also makes it more difficult to budget and keep track of your payments. If you have more credit cards than you need, simply pay off the balance, take them out of your wallet and stop using them, or even better, cancel them altogether.
-
You think purchases are “investments”
If you find yourself justifying the purchase of gadgets, cars and furniture, and anything else you wish to name, as an investment, you really need to stop. Although this might be a financial literacy problem for some people, this is a serious behavioural problem for most. We all know that cars, gadgets and furniture are not investments. All you’re doing is finding a reason to justify your behaviour.
‘All you’re doing is finding a reason to justify your behaviour’
Time to make a change
If you’re stuck in one of these behavioural traps then you can change. By replacing these behaviours with a few of these simple ways to save money (courtesy of Wonga SA), you’ll soon start to turn your financial situation around.
__________________________________________________________________________________
Some of the Tips, which you can go check out in the link above include things like: Planning well for meals and lunch at work, shopping weekly rather than daily, buying generics as opposed to names brnads and more.
If you find that you need advice on how to budget also feel free to go visit your local Debt Counsellor. Many will give you budgeting advice for free. IF you have growing debt now is the time to get a handle on the situation.
__________________________________________________________________________________
.
Do you notice any of these behaviours in yourself? Or have some destructive behaviours of your own? Please share your experiences in the comments section below.
__________________________________________________________________________________
Article Contributed by: Stephen Davies
Stephen G Davies MSc writes about world news, finance, marketing, technology, business and covers product reviews for global firms. Stephen has written for digital agencies, e-zines and maintains a passion for updating a number of his own blogs. Writer by day, reader by night, Stephen enjoys being aware of world events and affairs and is passionate about related topics.