Five Spending Habits to Be Avoided to Keep You Debt Free

Written by admin on April 26th, 2011

Statistics show that most people get themselves into a debt problem mainly due to their own spending habits. Recognizing the habits that cause these people trapped into stressful debt situation and avoid them will keep you debt free. The major habits that create debt trouble are:

1. Spending more money than you earn

If you only make 00 a month, but you spend 00, creating 0 negative cash flow every month. It might not sound logically possible, where the extra 0 comes from? It is fine if you have savings that allow you to spend more, but most people spend in cashless using their credit card. Normally, the limit for a credit card can be easily approved for 10x of a person monthly earnings; therefore, it’s very easy to overspend if you spend using credit cards. In fact, spending with credit is the primary way of spending more money than you bring in. When the balance is not pay in full, it will be brought forward month by month and generating debt. You will find difficulties to pay the debt when it hit a level beyond your financial capability.

2. Make purchases with instalment

Although there is nothing wrong to make purchases with instalment, it is not a healthy spending habit either. Most often, people make purchases on items that are beyond their financial affordability by making instalment using their credit card. The monthly instalment will be automatically charged into the credit card, it needs to be paid when the monthly statement arrives. If the balance is not cleared in full, it will continue to grow and snowball to a bigger debt.

3. Using credit for ordinary purchases

Using credit to pay for ordinary purchases like groceries, gas, clothes and foods are a bad spending habit, especially when you don’t pay your credit card bills in full each month. Don’t use your credit card to replace the cash payment when making ordinary purchases because you may get into a habit and creating credit card debt without realizing on time.

4. Use credit although you have cash

No doubt it is very convenient to make payment with credit card, but don’t use it if you have the cash to make the purchase. When you buy thing with cash, you will have a better control on how the cash flows. Moreover, making purchases with cash help you to think twice on whether the purchases are necessary. Therefore, a good spending habit should always use cash instead of credit in making purchases. Remember that the convenience of leaving your money in your wallet may come at a cost because when you pay it, you need to pay with interest.

5. Spend all the money without savings

Money is never enough. Many people tend to spend all their earnings every month without allocating a portion for savings as their emergency fund; some even finish their month salary before the month end and have to rely on payday loan while waiting for next payday. When any emergency happens that need huge cash urgently, without an emergency fund, they may have to get a fast approved loan that always comes with high interest rate and creating debt that may become a financial burden if the debt payment is beyond their financial affordability.


Bad spending habits are among the key factors that may get you into stressful debt situation. Identify the above bad spending habits and avoid them if you want to have a debt free lifestyle.

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