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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

      Ivan is the CEO and founder of a digital marketing company. He has years of experiences in team management, entrepreneurship and productivity.

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      Last Updated on June 26, 2020

      25 Easy Tips on How to Save Money Fast

      25 Easy Tips on How to Save Money Fast

      “How to save money fast?” This is the question asked by all of us not in the top 1% of rich people.

      If you are looking for ways to drastically reduce your expenses immediately, first look at what you need to spend money on every week. And I mean really need.

      You don’t really need to order in food. You don’t really need to buy expensive perfume.

      Building from that, you can work out how your regular expenses can be reduced.

      As for irregular expenses, they can also be deceptively costly in the long run. Once-off buys can also be tackled with some prudent planning and a little extra research.

      And remember: a budgeted lifestyle does not mean a bad or boring one!

      But first, understand what budget you can cut down on daily:

      • Regular expenses for the average adult (can be trimmed but not eliminated):
        • food
        • rent/mortgage
        • cell phone
        • insurance
        • socializing/entertainment
        • transportation
        • hygiene products
        • household bills
      • Irregular expenses for the average adult (can be eliminated or cut down a lot):
        • travel
        • clothing
        • medication (*depends)
        • grooming (hair, nails etc.)
        • gifts

      Now, let’s dive right into the 25 ways to save money fast:

      Save Money on Food

      1. Bring a stock of food to the office/work

      Instead of popping out for an overpriced salad and a smoothie, leave a set of basic utensils at the office as well as a stock of non-perishable goods such as tinned fruit, tuna, rice crackers and so on (try to avoid the junk food and this can turn into a pretty great diet!).

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      Stocking up means you won’t forget or say “I didn’t have the time” when you rushed out to work in the morning.

      2. Buy the store-brand version

      Many basic foods, such as bread and milk, will taste exactly the same as their branded alternatives. Go for stuff with minimal additives and preservatives. Meat in a tube is probably insanely unhealthy!

      3. Eat cheaper cuts of meat

      Learn how to tenderize and flavour cheaper meat and fish, and save on the (typically) most expensive item on your grocery bill.

      4. Have group dinners

      If 10 friends put $5 each in the kitty, it’s pretty easy to make a giant lasagne and get refreshments, as well as hang out with your favourite people.

      Save Money in Transport

      5. Get a bicycle

      Save on gas money and bus/metro fares with this underrated mode of transport.

      6. Use public transport and/or don’t get taxis

      Some places can only be reached by car. But as a good practise, check your public transport website and see if any routes pass nearby where you need to get to. Walk as much as you can.

      7. Find the cheapest gas

      Regularly check out where the cheapest gas can be bought.

      Save Money in General Shopping

      8. Shop online

      Not only will you save on the gas or transport fares from going to the shopping mall but you will also find better deals

      9. Sell your old stuff

      Get your unwanted belongings up on eBay ASAP and earn a few dollars.

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      Here’re more ideas for you: 25 Things to Sell to Make a Lot of Money

      10. Bulk buying stores

      For regular non-perishable/slow perishable purchases such as toilet paper, cat food, pasta, washing powder and so on, do an epic stocking-up trip to a co-op or equivalent (my mum used to go to a place that restaurants buy from).

      Be wary of supermarket “deals”, as some have been found to be fraudulent after working out a simple calculation.

      11. Become a flea market/car boot sale/street market guru

      You can find original gifts and develop good negotiation skills at these places.

      12. Generic brand medication

      More often than not, the generic version of paracetamol and other basics work the same as the branded version.

      13. Choose deodorant, not perfume

      It blows my mind when someone drops $70 on a bottle of spray. Stick with a nice deodorant, and not only will you smell just fine but you’ll be sweat-free as well!

      Cut Down on Household Expenses

      14. Printing

      Ink is one of the most expensive substances in the office and coloured ink is doubly so. B

      e more efficient and choose black and white, and if your printer doesn’t have a print-both-sides options, just print odd pages first, re-insert the paper and print even pages.

      Expand the margins of what you are printing as often as you can to save on paper.

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      15. Minimize SMS and phone calls

      A combination of a free chat service such as WhatsApp and a free call service such as Skype can reduce your bill to nothing (so long as you have a decent Wifi connection).

      16. Shop around for insurance

      Most people don’t spend enough time searching for the best insurance deal.

      Keep a watchful eye out for deals and new competitors in the market.

      17. Try re-negotiating your rent/mortgage

      If you have built up a good credit history or a good rapport with your landlord, then chances are a frank chat about needing to tighten your spending could result in lowering your payments. You’ve nothing to lose from trying.

      18. Don’t get a TV

      Invest in a computer/laptop and an internet-only package. You can watch more (and often better) entertainment on the web, and skip the advertisements as well.

      19. Pool your internet bill with a neighbour

      My apartment building is basically a big old house split into three apartments. There are five of us in total. We pool the internet bill, making it crazy cheap.

      Save Money in Socializing, Entertainment And Travel

      20. Have house parties

      Instead of paying for overpriced drinks, set up a series of in-house get-togethers with your friends. Everyone takes a turn, so it’s not always your house that needs cleaning.

      For sound insulation, hang heavy drapes on the walls and windows. For music, invest in a good second-hand set of speakers which you can connect to your computer. Let Spotify or Grooveshark playlists do the rest.

      21. Open festivals, meetups and events

      It never fails to surprise me how much underground stuff goes on around me for free or for very cheap. Find out who runs the blogs and websites that list all the less well-known cultural activities.

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      22. Volunteer

      If you can’t pay for a ticket, volunteer and get to be there anyway.

      23. Housesit

      There are multiple housesitting websites offering you the possibility to avoid paying hotels and skip the discomfort of crummy hostels.

      Save Money on Hygiene and Beauty

      24. DIY beauty

      French manicures, pedicures, waxing, eyebrows… pretty much all of these can be achieved at home (and done well) with some practise. There are plenty excellent blogs and YouTube tutorials to help.

      25. Fewer haircuts/volunteer at a trainee hairdresser

      If you can’t bear the risk of a trainee touching your locks, learn more ways to manipulate your hair as it grows and get haircuts sparingly. Women’s haircuts are outrageously priced in many cities.

      Bonus: Effective Money-Saving Tips for Everything

      Here’s a summary of what you can generally do to save more money:

      • Share/pool resources. Organize a neighbourhood sharing scheme, common resources for your apartment block or with your friends. Not everybody needs an individual lawnmower.
      • Buy energy-saving everything. The easiest way to lower your bills – replace those lightbulbs!
      • Buy in bulk. Be sensible about it (i.e. make sure you have space!), and drastically reduce weekly expenditure.
      • DIY. Skill up using YouTube tutorials on plumbing and many other essential services so you never have to pay for simple problems again.
      • Research a lot before making a decision. Most money-wasting is the result of poor preparation and planning. Don’t shirk this part just because you don’t like it!
      • Use your network. Your network is full of resources that can ease the pain of budgeting. Ask for help.
      • Stop and think. Do I really need it?

      Unfortunately, there are some things that require plain ol’ giving up for the time being. This can include high-cost sports such as skiing, the latest versions of some technologies, the finest brands of food/drinks, premier seats at the opera and most other indulgences.

      What is important to remember during lean times is that when you look back on your life, it will be the experiences that stand out, not the extra comforts.

      Living on a budget can teach you a lot about how much you can really get out of your paycheck. We only live one life, so make the most of every penny you earn!

      More Tips for Personal Finance Management

      Featured photo credit: Unsplash via unsplash.com

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