The average U.S. household carries credit card debt. But what habits set those with debt apart from those who stay in the black? Some of the most common causes for indebtedness include underemployment or medical expenses. If you find yourself in perpetual debt, but these two aren’t the culprits, look a little further for behaviors that might be keeping you in the red.
Impulse buying.
Those who are constantly in debt can be the type to snatch up something whether it’s on sale or not – even if the purchase wasn’t exactly planned. Impulse buying can lead to dangerous spending behaviors especially if you find yourself ‘justifying’ the spending or finding that you lose track of how it fits into the things you really need to buy. It is a slippery slope if you find that once you’ve exceeded your budget, you spend even more.
Keeping up with the neighbors.
While some people don’t care about measuring up to others, it can create a financial challenge if you are trying to keep up with the neighbors. When others buy a new vehicle, sport new jewelry or show off their vacation pictures, it can trigger competition. This can be a problem if it leads you and your family to poor spending habits.
Shopping and purchasing to create happiness.
Shopping can release endorphins in the brain, similar to what you might feel when you exercise or eat chocolate. Unfortunately, spending money in order to feel good can actually become addictive….and can be hard to break.
Trying to forget about your debt load.
Out of sight and out of mind might seem easier, but it is a sign that your debt is out of control. A number of studies have now indicated that overconfidence about one’s ability to pay back debt is related to taking on debt. If you find yourself avoiding phone calls from creditors and collection agencies or ignoring the mail by throwing it away or stacking it in the corner or realizing that you become angry when debt is discussed, you may want to plan for some change.
Using credit card gimmicks or points.
Not all reward cards are evil and some even have a place in your purse or wallet. But if owning a credit card encourages your spending to get the perks, you may want to doublecheck that you are getting back what you think you are getting from rewards cards.
And of course, finding yourself paying only the minimum on your debt.
You don’t have to like your debt situation, but you should be very aware of where you are. Always pay utility and fixed bills first and start to think about the remainder of your cash flow. Choose the debt account with the smallest balance and pay it off first. Paying this one account off can help you feel much more in control and keep you in the drivers’ seat of family finance.
