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7 Types of People Who Can’t Avoid Debt

7 Types of People Who Can’t Avoid Debt

Living in a first-world country has a lot of perks and being able to buy things you can’t immediately afford is a big one. Taking out loans and acquiring a bit of debt is an essential part of life. In an ideal world, people would use credit for major, life-altering purchases like a house or a car and then pay off the debt within the next few years. However, this idealistic scenario hangs on the assumption that people are incredibly responsible and will be able to create an effective budget and stick to it, even if it means not being able to afford all the pretty, shiny things that they want. There are people out there who just can’t seem to avoid debt; they seem almost drawn to it. If you want to avoid becoming one of them, you need to understand what it is that causes problems with credit.

1. People whose buying decisions are influenced by others

The type of person that is most likely to accumulate debt is one who is unsatisfied with his life and always looks to others with envy.  These people falsely assume that if they buy the same things and live the same lifestyle as someone they admire, they will somehow be respected and achieve a sense of fulfillment. Just because the Johnsons from down the street have a Mercedes parked in their driveway doesn’t mean that you have to go out and get one, nor do you need some of the high-tech gadgetry and jewelry they flaunt at local parties – particularly if all these things are well above your pay grade. In order to avoid becoming this type of person you’ll need to sit down with your significant other or family members and have constructive discussion about what you can do to feel comfortable in your own skin and how much you can actually afford to spend on various items. There are a number of self-help books and motivational videos out there that will help you come to terms with your finances.  You need to realize that respect and happiness aren’t synonymous with owning a bunch of high-end equipment and expensive clothes.

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2. People who are impulsive buyers

Excited Shopping Woman

    Some people just don’t seem to have any self-control whatsoever. They will walk around the mall like  little squirrels gathering nuts for the winter, turning their heads at every “Sale” sign and stopping at every shop window. It doesn’t matter whether they need an item or not, they will buy a new blender, rowing machine, tablet or purse, simply for the thrill of it. Now, there is nothing wrong with going on an endorphin-inducing shopping spree every now and again, but impulsive buyers will accumulate large amounts of debt by constantly buying impractical items they don’t really have a use for, or even useful items that are way out of their price range. Knowing your priorities and being realistic can help you avoid using credit to make impulsive purchases. When you get an urge to buy something, take a moment to breathe and remind yourself that your finances don’t allow that type of purchase right now. Write some of those expensive, pretty things down in your wish list and quench your thirst for shopping by buying some inexpensive trinkets.  As long as you buy something new you will get that rush of excitement you usually get from shopping; just keep it cheap and simple.

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    3. People who take random advice from others

    While your family and friends can sometimes be a true source of inspiration and offer a helping hand and shoulder to cry on, not every piece of advice they give will be particularly sound. Remember, these people are not, for the most part, experts on business and finance, and there is a good chance that they have heard a few sentences on TV or read something online a few years back and now feel qualified to give out all kinds of advice on how to avoid debt or pay it off. If you want advice on developing a good budget and getting your finances in check you need to consult professionals. When a friend or family member gives you some financial advice, just nod politely and thank them, then double check it when you get home and see if what they suggest really works.

    4. People who don’t have clear goals

    It’s a sad sight to see, but there are plenty of people out there in their early thirties acting like teenagers and focusing on game consoles, video games and beer rather than investing in their home, their children’s clothes or paying off their student loans. When you are that selfish, irresponsible and have no real ambition and clear goals it’s easy to lose sight of what’s important and continue living in an imaginary world where things like financial stability, family, responsibilities and hard-work are disregarded in favor of  trivial things. Having some kind of idea of where you want your life to go is important if you don’t want to become this type of person. Setting goals for yourself isn’t really difficult – you need one or two major goals that you want to achieve in  5-6 years and few smaller goals that can be achieved within the next year. The goals can be as simple getting in shape or paying off your car by next year, but all of this should tie in to your long-term goal, e.g. getting a bigger apartment so you can move in with your partner.

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    5. People who don’t have a savings account

    A savings account with a couple of thousand dollars on it can serve as a safety net. If an unexpected event occurs and you don’t have any money stashed away, it can end up ruining your efforts to pay of your existing debt or cause you to fall further into debt. People who have at least a thousand dollars saved for rainy days can deal with all sorts of problems and suffer much less stress than those getting by paycheck-to-paycheck. Be sure to set aside a bit of money each month – even $100 or $200 every month can be enough. Change your thinking about windfall money; your tax refund, a bonus, or a generous gift should be seen as an opportunity to build your savings, not to buy some big-ticket item you’ve been wishing for.

    6. People who don’t know how to create an effective budget

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    Girl writting in notebook

      Writing things down on paper has an incredible way of enlightening you as to where you are going wrong. You can justify all kinds of bad decisions in your head, form a distorted picture of reality and even lie to yourself about how much you spend on things that are not essential, but when the cold facts are sitting in front of you, in black and white, it’s much easier to create a plan and make the right budget cuts. Write down how much you earn – coupled with how much other members of the household earn – and make a list of your monthly expenses. You need to divide the expenses into several categories, but the most important classification is necessary, fixed expenses (car payments, rent, bills, etc.) vs. flexible expenses (food, clothing, gas, hygiene products, etc.) vs. optional expenses (video games, new hat, blender, etc.). Savings can be made on flexible expenses (avoiding overpriced name brands, buying food in bulk, using coupons and looking for good deals) while a lot of optional expenses can be cut out of the budget altogether or put on hold for a couple of months until your finances start shaping up.

      7. People who use credit for everything

      It is quite reasonable to use a credit card in some situations and take out loans when a major investment is required, but there are people who’ll make 3-5 small store runs during the day and just keep putting things on their credit cards. When you buy with cash you have a very good idea of just how much you are spending.  When using a credit card it’s easy to get carried away and forget that all those little purchases add up to quite a bit. If you want to stay debt free, consider using cash for smaller purchases or creating a list of things you need for that day and buying them all in one go. Weekly shopping runs are a great way to save money because you buy in bulk and avoid unplanned, spur-of-the-moment purchases like random snacks and drinks. Having a list prepared ahead of time will help you to get everything you need in that one trip, and will also help curtail impulse buying.

      These seven types of people can’t seem to avoid debt for many different reasons. If you want to learn how to keep yourself from accumulating more and more debt and wish to pay off your existing debt,  you will need to identify the mistakes these people make, understand why they lead to more debt, and try to avoid making the same mistakes.

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      Ivan Dimitrijevic

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      Published on October 8, 2018

      13 Incredibly Useful Tactics to Help You to Stick to Your Family Budget

      13 Incredibly Useful Tactics to Help You to Stick to Your Family Budget

      Are you having trouble sticking to a family budget? You aren’t alone.

      Budgeting is difficult. Creating one is hard enough, but actually sticking to it is a whole other issue. Things come up. Desires and cravings happen. And the next thing you know, budgets break.

      So how can you stick to a family budget? Here are 13 tips to make it easier.

      1. Choose a major category each month to attack

      As the saying goes, “Rome wasn’t built in a day.” With that in mind, one approach to help you get into the habit of sticking to a budget is simply starting slow.

      Spend too much on Starbucks runs, eat out too often, and have an out-of-this-world grocery bill? Choose one bad habit and attack.

      By choosing one behavior to focus on, you’ll prevent yourself from being overwhelmed. You’ll also experience small victories, which help you gain positive momentum. This momentum can then carry over into your overall budget.

      2. Only make major purchases in the morning

      If you’re making large purchases in the evening, there’s a good chance you’re doing so after a long day and you’re probably tired.

      Why does this matter? Because our judgement tends to be off when tired – our willpower is compromised.

      Instead, only make major purchasing decisions in the morning when you’re energized and refreshed. Your brain will be firing on all cylinders and your resolve will be high. You’re less likely to give in and settle at this point.

      3. Don’t go to the grocery store hungry

      Have trouble with impulse buys at the grocery store? If so, there’s a good chance you’re going grocery shopping while hungry.

      The problem here is that when you’re hungry, everything looks good. So you’re more likely to make split decisions on things that aren’t on your grocery list.

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      Instead, make sure you eat prior to your grocery store trip. Then take your list, along with your full stomach, and go shopping. Notice how food doesn’t look quite so good when you’re not fighting cravings.

      4. Read one-star reviews for products

      Is there a product you just have to have (but maybe not really)? Check out the one-star reviews.

      By reading all the horrible reviews, you may be able to basically trick yourself into deciding that the product isn’t worth your time and money.

      Next thing you know, you didn’t make the purchase, you saved the money, and you feel good about the decision.

      5. Never buy anything you put in an online shopping cart until the next day

      If you are making a purchase online, it’s typically a two-step process. First, you click “Add to Cart” and then you go in to review your cart and pay.

      The problem is that there not typically much reviewing during step two. It’s generally click pay and there you go. However, this is the perfect point to stop for reflection.

      Once you add to your cart, your best bet is to step away until the next day. Let the item sit there and grow cold, so to speak.

      This gives you a night to “sleep on it” and decide if you really want and need to spend that money. If you wake up the next day and still find the purchase viable, then perhaps it’s time to go for it.

      6. Don’t save your credit card info on any site you shop on

      One of the other pitfalls of shopping online is that fact that most sites ask you to save your credit card information.

      While the sites will frame it as a method of convenience, the truth is they know you’ll spend more money in the long run if your credit card information is saved.

      The “convenience” takes away one last decision-making point in the purchasing process. True, it’s a pain to get out your credit card and enter the information every time. But guess what? That’s the point. If that inconvenience helps you stay on budget, then it’s worth it. Which leads into the next tip.

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      7. Tape an “impulse buy” reminder to your credit card

      Credit cards make spending much easier than cash. When you spend cash, you can literally see your wallet emptying. A credit card comes out, then goes back in. No harm, no foul.

      That’s why it’s a good idea to tape a reminder to your credit card. Customize a message that is something along the lines of “do you really need this?” or “does it fit the budget?”

      That way when you pull out the card, you get one last reminder to help you question your decision and stick to your budget.

      8. Only use gift cards to shop on Amazon

      Amazon is probably the easiest place online to blow money. It’s just so easy to click and buy. However, one way you can slow the process down is buy only using gift cards. Here’s how it works.

      If you plan on making a purchase on Amazon, go to the grocery store and purchase a pre-loaded Amazon gift card of the proper amount. There’s no convenience fee, so you literally pay for the money you’ll spend.

      Now take that gift card home and load it to your Amazon account. There’s your money to spend.

      Why does this help? It makes you have to purposely go to the score and purchase the card in order to purchase the item. That’s a pretty deliberate thing that takes some time, commitment, and thought.

      This process will effectively kill the impulse buy.

      9. Budget using cash and envelopes

      As mentioned earlier, it’s a lot harder to spend cash than swipe a credit card. You can take this even farther by using only cash, and separating that cash by budget category.

      Create an envelope for each category and stick the cash in there at the beginning of each month. When the envelope is empty, no more spending on that category, unless you borrow from another (be careful of that approach).

      This can be pretty helpful for people that have a hard time following transactions in their checking account, or keeping a budgeting spreadsheet.

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      The envelopes simplify the tracking process, leaving no room for error. Nothing hides from you because it’s tangible in the envelopes in front of you.

      10. Join a like-minded group

      Making the decision to stick to something like budgeting is difficult. It takes long-term commitment.

      You’re going to feel weak sometimes. And sometimes you may fail. That said, support from others can help strengthen resolve.

      Support can come from a spouse or a friend, but they won’t always have the exact same goal in mind. That’s why it’s a good idea to join a support group that’s likeminded.

      No need to pay here, as there are tons of free communities that fit the bill online.

      For example, reddit has multiple subreddits that deal with budgeting and frugal living. You can follow, subscribe, and get active in those communities.

      This will open your eyes to new tips and strategies, keep your goal fresh on your mind, and help you realize there are others dealing with the same struggles and being successful.

      11. Reward Yourself

      When you set a budget, it’s usually with a large goal in mind. Maybe you want to be debt free, or perhaps you want to see $10,000 in your savings account.

      Whatever the case, the end goal is great, but the end is often far away, making it hard to see the end of the tunnel.

      With that in mind, it’s a good idea to set mini-goals along the way. This helps you still look at the big picture but have something that’s attainable in the short-term to help with momentum.

      But don’t stop there – set rewards for yourself when you reach that small goal. Maybe it’s an extra meal out. Or a new pair of shoes.

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      Whatever the case, this gives you something in the near future to look forward to, which can help with the fatigue that can result in pursuing long-term goals.

      12. Take the Buddhist approach

      You don’t have to be a Buddhist to recognize some of the wisdom in the teachings. One of the tenets of the philosophy involves accepting that we can’t have everything we want. And that’s okay.

      Sometimes you won’t feel good. Sometimes you’ll have cravings. You can’t deny them. But you can recognize them, accept them, and let them pass by. Then you move on.

      Apply this to the times you want to do things that will break your budget. You’re going to have the desire to eat out when you shouldn’t. You might want to stay out and spend too much at happy hour with your work friends.

      The feelings will come. Recognize them, accept them, but let them go.

      13. Set up automatic drafts to savings

      If you wait until you’ve spent all your budgeted money to deposit money into savings, guess what? You probably aren’t going to put any money into savings.

      It’s too easy to see that as extra money and end up using it to treat yourself.

      Instead, set up automatic savings withdrawals. That way, the money is marked and gone before you can even think about it. It becomes a non-issue. It’s no longer “extra.” It’s just savings.

      Conclusion

      Sticking to a budget can be difficult. No one is denying that.

      However, if you can do a few things to set yourself up for success, and put some practices in place to curb impulse buys, then you can (and will!) be successful sticking to your family budget.

      Featured photo credit: rawpixel via unsplash.com

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