Four Habits That Lead to Debt

We live in a society filled with debt. Many people struggle to pay their bills, and they reach for their credit cards in order to put food on the table. They take out loans, so they can drive a flashy car. Their mortgage may be overwhelming because they wanted a big home.

The good news is that you don't have to live the rest of your life in debt. It is possible to get out of debt, though it can be quite challenging.

The best thing that you can do is to stay out of debt. To do so, you need to know what habits are more likely to lead you to debt. These include:

Spending more money than you make. If you are spending more money than you make, you are going to have to find ways to pay for it. While you may start by taking money out of your savings account, eventually, you are going to need to reach for your credit cards or take out a loan. This can quickly add up.

Using credit cards when you have the money. Most credit cards get you because they offer rewards just for using your card. Some even offer rewards when you pay it off. Because of this, many people reach for their credit cards even when they can afford to pay for it right now. This is fine when you pay it off every month but if you spend that money on something else, you won't be able to pay off your credit card bill every month, making your fees add up (and up and up)!

Not having an emergency fund. You need to have an emergency fund that has enough money to get you through a rough patch. You can use this money if you lose your job, your car breaks down, or anything else that can go wrong. If you don't have some funds to get you through difficult times, you are going to end up putting more money on the credit card when it happens, leading to even more debt.

Not having enough insurance. Just like an emergency fund, you need to be prepared in case of an emergency. If you lost your house to a fire, could you replace it and everything inside of it? Would you be able to pay the mortgage even though your home is gone?

The same goes for your car. If you are in an accident, do you have enough coverage? You also need health insurance. One accident or illness could wipe out your savings and put you in even more debt than your house. You could have bills in the hundreds of thousands that you are going to be expected to pay.

Though insurance is expensive, you can't afford not to have it. Your home, car, and health need to be protected.

Though it can be hard to figure out how one got in debt, there are some habits that can cause people to end up in financial trouble. If you are spending more money than you are making every month, you are going to have to come up with that money somehow!

You also need to have an emergency fund. If you don't, you are going to be reaching for your credit cards whenever something happens! Try to save up at least one thousand dollars to have handy to help you out of a difficult spot.

You also need insurance for your home, car, and your health. If you get sick, your medical bills can be astronomical. Replacing your home and everything inside of it could also ruin you financially, so you can't afford not to have insurance.

Previously published on Medium and/or Newsbreak.