Chances are your New Year’s financial resolutions are out the window, but there is still time to identify on-going financial mistakes and to make some long lasting changes to guide your financial house successfully to soundness.
National Debt Relief’s research turned up eight bad financial habits your should consider.
1. Spending more than you earn
More than half of people (among those surveyed) spent more than they earned. The best way to overcome this bad habit is to set a budget that keeps your spending below your earnings and stick with it. Snowmint Creative Solutions has fun budgeting software that incorporates pictures of envelopes for each expense. It’s available for PC or Mac, and as an add-on for the iPad, iPhone, and iPod Touch. You can use this software to help keep your budgeting on track and make sure that you’re living within your means.
2. Using credit cards like they are free money
It’s all too easy to pay now with a card and worry about it later. Keep your credit cards at home. Better yet, cut them up. Overspending on credit cards is one of the easiest ways to get into debt because of the notion that you can always pay it off later. But this line of thinking has led to millions of Americans racking up thousands of dollars each on multiple cards. If you must use credit, make sure to pay off the full balance at the end of each month.
3. Ignoring bills
It’s tempting to bury your head in the sand when it comes to your bills, but ignoring them won’t make them go away, and late fees will only make them worse. Or maybe you’re just not good at remembering when they’re due? BillTracker by SnapTap is a simple bill reminder app that shows you when payments are due, so you can stay on top of things. Late fees are a waste of your money, so stop waiting until the last minute and keep track of what’s due when to avoid paying even more than you should.
4. Not putting money aside in a savings account
Saving money should be equally as important as paying your bills. Determine a specific amount that you’d like to put away and, when you pay your bills, pay yourself. Even small amounts will add up over time. This is essential not only for use in case of an emergency, but also for building your future.
5. Paying the minimum amount due on credit cards
Paying the minimum on credit card balances is like a snail trying to run a race. He’ll get to the finish line, eventually. If you have a credit card with an interest rate of 12% and a balance of $20,000, and you only pay the minimum amount due every month (typically 2% of the principle, which in this case is $400), you’ll pay it off in 5.8 years, and $7,800 of those payments goes to interest. Credit.com has put together a simple calculator that will tell you how long it will take to pay off your credit cards. Try adding $20 or $40 to the monthly minimum and watch the months, or maybe years, fall off!
6. Impulse shopping
There’s a reason stores put all that candy and those miscellaneous items near the registers. They know shoppers have to wait in line, often for long periods. These items are inexpensive, so what’s the harm in a candy bar or a Chia Pet? No matter what store you’re going to, make a list and stick to it! If you find yourself waiting in line, pull up that bill reminder app and put priorities back in perspective.
7. Not realizing the value of coupons
Sifting through the Sunday paper clipping coupons is time-consuming and tedious. There are many coupon websites available, many with printable coupons, but you still have to clip the coupon, except now you have to download it first. RetailMeNot takes the hassle out of couponing. Simply go to a store, look up a coupon for that store, and the cashier can scan the coupon right off your phone. It couldn’t be easier. Using coupons where you saves you a little with each purchase, but a LOT over time.
8. Using credit cards to earn rewards points
Credit card companies are not giving you free money, free miles, or gifts. You pay for them with higher interest rates or via interest payments if you’re not paying off your balance every month. If you read the fine print, you may find that the points expire or that you don’t earn them on every purchase. That’s not to say that some cards aren’t better than others are, but ultimately, you get what you pay for. So, if you are receiving reward points, you are likely paying for them in some way.
It’s never too late to evaluate your bad financial habits and begin making responsible decisions. Even small changes can add up and make a huge difference in helping you regain control of your financial situation.