Everybody has debt – or at least, has experienced having debts at one point in their life. It may be in the form of credit card balance, college loans, car loans, or mortgage. Most say debt is simply part of the complete life experience – it’s something that happens that you just need to accept. While this is true, everyone must also know that it’s imperative to get out of debt fast because it has the ability to take control of your life and set it up for hardships.
In order to regain control and eventually launch into the path leading to growth of wealth, people must understand how they accrue debts.
Too Much Reliance on Credit Cards
Practically everybody has a credit card now – young children even hold supplemental credit cards from their parents. It’s crucial to note that credit cards are not evil; in fact, they are very helpful. They are safer payment options, especially for transactions that involve a lot of cash. They also allow you to manage your finances strategically.
Here’s the problem with credit cards: People process payments using a credit card differently from payments made with cash. When people don’t see money, they have the stronger tendency to be loose with it. Because of this, so many folks these days usually have a huge balance on their credit card.
Wise up: To make it difficult to yield to the temptation of using credit cards, stop carrying them with you all the time. Only bring them with you when a credit card is the preferred payment method, like when you’re purchasing new appliances in an installment program.
Action is Made Before Careful Thought
According to User Interface Engineering, about 40 percent of all money spent is through impulse buying. This basically means that people, young and old, make a purchase before completely processing the impact of this activity on their finances and life. The reality to face after the purchase is that the happy feeling doesn’t even last long and that the money could have gone to something more worthwhile and with longer-lasting positive impact.
Wise up: Avoid situations that will entice you to make unnecessary purchases, such as casual trips to the mall or checking out deals from e-commerce sites.
Too Much Optimism
It helps to look at the positive side of life, but if you’re too optimistic about the future, you neglect to calculate risks that contribute to smart decision-making. This is the cause of many people’s downfall during the global economic recession. So many people had courageously purchased pricey new homes and vehicles, thinking that they would not lose their job or that their business would not go bust.
Wise up: As much as possible, don’t buy anything that you cannot afford now.
Not Accounting for the Little Things
Those boxes of gum, frequent trips to Starbucks and the vending machines, and even tipping can all build up. When you don’t include these in your recognized expenses, you won’t be able to correctly manage your expenses and direct money toward paying off debts.
Wise up: Write down all your purchases to clearly determine how much money you spend and then identify items that you can do without in order to save money to pay off debt.
These four are the most common reasons for debt. Meanwhile, the following prevent many from growing their wealth:
Refusing to Get Help From Professionals During a Financial Crisis
Self-reliance is an admirable trait but when it comes to financial matters, there are specialists that have greater knowledge and ability to deal with financial issues. Their strategies are tried and true and can yield target results easier and faster.
Playing it Safe Too Much
You refuse to invest or grow a business until there’s already a lot of money tucked away in the bank. This is a very common mistake. When you’re too protective of your money, you’re prevented from making leaps when it comes to growing business operations and increasing wealth.
The uncertainty of the future truly is daunting, but this shouldn’t hinder you from boosting your source of income. If you will turn to the knowledge and expertise of industry professionals, you can manage risks and secure investments or the advancement of your business in the global market.
You can’t free yourself from debt and boost your wealth easily if you’re coming from a background of wrong practices. The wise thing to do is to invest in the expertise of finance professionals or turn to your bank; HSBC offers services for finance growth, investments, business support, and risk management. With their guidance, you’ll gain a deeper understanding of your financial status and learn how you can manage your assets to ensure your life advantage.