Three Dont’s That Will Get You Into Debt
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A little over a year and a half ago, my husband and I decided that we had to take control of our money. Our spending had spiraled out of control and landed us in a world of financial hurt. I am feeling reflective today and can’t help but realize how much our financial habits and priorities have changed since we decided to begin our journey of getting out of debt about 18 months ago. If you’re working your way out of debt or taking the first steps of your debt payoff journey, a lesson from my past might help you along your way.
Specifically, I remember that three money mindsets we used to have were the catalyst for our huge debt problem. They seemed like “little things” at the time, but they added up to big financial trouble. If you are anything like we were, these money mindsets might be destroying your financial life.
#1 – Don’t Keep Receipts or Track Your Spending
If you’re not in a habit of tracking your spending, it can be easy to justify/deny/forget about where much of your money is going. When we first started tracking our spending in January of 2013, we decided to go back and analyze our 2012 spending so that we had a clear picture of what got us into trouble in the first place.
It turned out that although we “thought” we were being responsible with our money, we were truly spending much more than we figured in areas like groceries, entertainment, gas money and clothing. We were stunned after reviewing our 2012 expenditures to see that we spent nearly double of what we “assumed” we were spending in those areas.
Now that we’re tracking every dime we spend, we have a spreadsheet that we can review whenever we want that keeps us honest about where our money is going, and encourages us to continue making changes that will better our family’s financial situation.
#2 – Don’t Choose the Right Role Models
When we were in denial about our debt situation, we often justified our spending by saying “Well, so-and-so spends much more on going out to eat than we do, so we’re okay.” and other similar lines that helped us to continue to turn a blind eye to major money mistakes.
If you find that you’re regularly telling yourself that you’re “not as bad as them” in terms of spending and money management, it’s time to get some new role models. Look for mentors who have similar or lower incomes than you but are debt free and building wealth.
Can’t find any real life mentors? There are hundreds of personal finance bloggers who’ve bravely shared their stories of overcoming mountains of debt and moved onto building wealth. Use them as your role models and start expecting better things from yourself regarding your money situation.
#3 – Don’t Accurately Assess the Dangers of Debt
“Everyone has debt”, “We don’t have as much debt as so-and-so”, “We can make the minimum payments just fine, so it’s okay.” These lines and others like them caused us to be in denial so long that we were up to our necks in hot water before we chose to face up to the magnitude of our debt situation.
Don’t let that happen to you. Start educating yourself and facing reality about the clear and present danger that your debt brings to your life, and make a plan today to kick that debt to the curb.
It can seem overwhelming to change money mindsets you’ve held for so long, but breaking free of the negative money mindsets that plague your finances is both freeing and refreshing.
What money mindsets do you hold or have you held that were drowning your finances in debt? Who are your financial role models?
Photo courtesy of: Mikko Saari