Monday, August 16, 2010

Avoid Debt Triggers

Debt triggers are the character traits or habits that cause you to overspend. Everyone has different triggers. Therefore, knowing your specific ones is critical for becoming financially free. However, while everybody is different, there are some common triggers that cause people to go into debt. Here are four of the most popular:

1. Using credit cards

This is one of the main ways that people spend too much. Since you do not need any cash, you can easily spend more than you have.

So what’s the solution? One option is to only use cash. You can still utilize the credit card every now and then. Just try and cut down on it. For instance, go to the grocery store with only the amount of money you plan on spending. Leave your card at home. This way, you cannot overspend even if you wanted to.

2. Buying based on emotion

If you analyze yourself, you will probably find you are spending on many things just to make yourself feel better. For instance, if you’ve been having a hard day, then you might relieve yourself by getting an ice cream cone.

Also, you might be reading a golf magazine and see an ad for a club that helps you hit the ball a lot further. You might not have had any intention of buying a club in the near future, but the ad created an emotional reaction in you that caused you to spend. Cutting down on want-based spending is very important.

3. Looking for sales

Only go “bargain hunting” when it’s for something you absolutely need. Many people shop for the express purpose of finding good deals. In other words, they buy an item simply because it’s so marked down.

You might think you saved money. In reality, you just bought something you wouldn’t otherwise have purchased. Only shop when you have something you need. If it’s not a necessity, forget it.

4. Have a budget

Not having a strict plan is one of the biggest triggers for overspending. If you do not know how much food you can afford for a given week, you will likely end up just buying anything that looks good.

The budget is the most important part of not overspending. How can you know what to spend if you don’t know how much you have in the first place?

The bottom line is, eliminating debt is usually not complicated. Just break your bad habits. However, you can’t do that until you know what those bad habits are in the first place. Hopefully these four triggers have given you insight into why many people overspend, and how to stop.

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