People are often amazed to learn how much of life is governed by habits. That coffee you drink every morning, the space in which you like to park when you get to work, the way you say good morning to your co-workers — all of these actions are driven by habits you’ve developed over the years.
Recognizing this about the way we function is crucial for those considering how to break the cycle of debt. Just like everything else, the way we spend, save and invest is predicated upon habitual behaviors. The good news is just as all habits are learned, they can also be unlearned — and replaced.
With that in mind, let’s look at some ways to reconfigure our money habits.
1. Get Your Ego in Check
Our egos can be our worst enemies when it comes to doing something that will be good for us in the long term.
Ego will tell us, “We work hard every day. We deserve something nice as a reward for all of the effort we put in. And, we should get it by any means necessary.”
However, when those means include taking on potentially unaffordable debt, it’s time to tell ego to shut the front door and take a nap.
2. Ignore Social Media and TV
If a faster method of convincing someone their lifestyle isn’t all it could be exists, it has yet to be revealed. TV is saturated with images trumpeting the message your life is less than it should be. Ditto-social media, its pages overflowing with people touting all the zing and bling their lives can bring.
Looking at our existences in comparison, we’re often left thinking we are lacking.
So, we go out and get some of those things — on credit — to feel better. Unfortunately, though, we can’t enjoy what we purchased because now we’re working too hard to pay the bill we created.
Meanwhile, here’s the dirty little secret few people will share: Those lives we’re admiring on social media and on TV are debt-ridden too — for the exact same reason.
3. Keep Your Mind on Your Money and Your Money on Your Mind
Being mindful of our means is a solid step toward breaking the cycle of debt.
It’s far too easy to engage in frivolous spending when we’re not being attentive to where our cash flows. If you keep a running tally of every penny you spend for a month and look back at it afterwards, you’ll be amazed to discover how much of what you think you need is actually stuff you want — and can live without.
Along with that realization will come the ability to direct more funds toward the eradication of debts. This, in turn, can position consumers to work with an organization like Freedom Financial Network if their finances have become too unmanageable to address on their own.
4. Kill Your Credit Cards
Changing our response from “credit” to “debit” when a cashier asks how we’re going to pay helps keep debt at bay. Every item we charge digs the hole that much deeper. Every time we pay cash (or make a debit transaction) we take one more step toward daylight.
Simply put, paying cash eradicates the creation of new debt.
Cut up credit cards, remove their numbers from online shopping sites and change subscriptions services to draw payments from debit cards rather than credit cards.
Now, with that said, there is such a thing as good credit and we need strong credit scores to take full advantage of it. Keeping accounts open will help boost a credit score, as long as we make using them as inconvenient as possible.
5. Earn More Money — And Save It
Lots of articles like this one will advise taking on a side gig to pull in some additional cash to deal with debts. However, to truly break the cycle of debt, we also need to put money away for that proverbial “rainy day.”
Using that side money to build up an emergency fund of at least six months’ worth of household expenses gives us the ends to deal with unexpected expenses with as little debt as possible.
Again, you’ll be surprised to learn — when you stop and think about it — how much of what we do is determined by habitual behaviors. These tips can help break the ones keeping us in debt.