Common Debt Causing Behaviours you can Avoid
Debt can be the result of a wide range of circumstances and actions. In some cases, the need to take on debt can be seemingly unavoidable, such as accessing a short-term loan to help meet your monthly mortgage or rental costs, but in others, it is completely unnecessary.
In the consumerist society we live in today, it is common for people to be in debt. Recent research has found that 60 percent of South Africans struggle to meet their monthly expenses and only 23 percent have any disposable income left at the end of the month. Given those statistics, it’s hardly surprising that levels of indebtedness are on the rise not only in South Africa but also around the world.
With finances clearly so tight, sometimes people have to borrow money just to get by. But there are also a number of common and avoidable behaviours that are contributing to levels of indebtedness around the world. If you find yourself stuck in one of the following behavioural traps, these budgeting tips courtesy of South African loan provider Wonga could help you turn your finances around.
- You spend money you don’t have
With many of us having such easy access to credit, simply not being to afford something is no longer a barrier to making the purchase. Many people live from one credit card bill to the next, making the minimum payment necessary without ever making a dent in the capital amount. As soon as they do start to chip away at the total bill, they then see something they absolutely ‘must have’ and the debt increases again.
- You have too many credit cards
Not only does having too many credit cards potentially damage your credit score, but it also makes you more likely to spend money you don’t have. If you to have too many credit cards, the simplest solution is to take them out of your wallet, or better still, rid yourself of temptation by cutting them up and putting them in the bin.
- Buying makes you feel good
In today’s society, too many of us rely on spending as an emotional crutch. In days gone by, this wouldn’t have been an option because credit wasn’t so readily available, but today, all that has changed. There are those of us who must always have the latest iPhone or the fanciest car, and while all that spending may improve your mood temporarily, it prevents you from spending money on the things that really matter.
- You treat purchases as investments
There are very things we buy that will actually rise in value. A house, if you’re lucky, is one, but aside from that, unless you’re a savvy collector of art or antiques, everything you buy will only make you poorer. Some people justify spending on the latest gadgets, clothing or cars as an investment, but it’s very unlikely that any of those items will ever increase in value. If you really want to invest in your future, put the money in a savings account.
What debt causing behaviours are you guilty of? How have you changed your habits? Please share your thoughts with our readers in the comments section below.