If you stay up all night worrying about your bills, debt, and expenses, there’s a chance that you may have fallen into a bad money habit. Whether you’re spending more than you earn, calculating outrageous budgets, or taking out payday loans for non emergency purposes, these are all mistakes that could be contributing to your sleepless nights and money woes. Understanding the errors you’re making when it comes to your finances could drastically improve your financial situation and may even help you get in a little extra shuteye.
Stop spending outside of your means
A recent survey by Rasmussen Reports for Country Financial revealed that around 50 percent of the 3,000 participants polled spend more money than they earn. And of those overspenders, 36 percent were pulling from their savings, while 22 percent were using credit cards, and 8 percent were borrowing money elsewhere. If you’re similarly living beyond your means, you’re partaking in one of the top bad money habits. There’s no way that you can possibly get ahead of your financial burdens when you’re spending more than you’re making.
One of the best ways that you can prevent yourself from overspending is to track every penny you spend each month. Yes, even that early morning latte here, and that Snickers bar there. Every little purchase adds up, so don’t forget to tally those in with the rest of your monthly purchases. Once you’ve done this, you will have a better idea of the areas in which you are over indulgent, and you’ll be more capable of creating a realistic budget.
Stop creating unrealistic budgets
In order to start saving and paying off personal debt and loans, you need to have a solid understanding of how much money is coming in and how much is going out. However, a budget will do you no good if you’re fibbing about the average costs of your night on the town or if you’re failing to follow the limitations you’ve set for yourself.
Begin by rounding up all your financial statements such as utility bills, bank statements, and paychecks. Next make a list of your monthly expenses from the essentials like rent, utilities, and car payments, and then add in your entertainment and leisure expenses such as shopping trips, dinner dates, and nights out. Be honest! Don’t “forget” to tally in the cost of that pricey fine Italian wine you can never seem to pass up at your favorite restaurant.
Then tally up your monthly income and expenses. If your expenses exceed your income, then you need to adjust your expenses so that your income is higher than your outgoing expenses. If your income is indeed higher, this is great news, and you can allocate the leftover income to savings and paying off any debt.
Once you’ve found a good balance between income and outgoing expenses, review it often to ensure that you’re still on track.
Stop using bad credit loans for non emergencies
Online payday loans are intended for one-time emergency situations such as a car repair or medical bill. However, only 16 percent of first-time payday loan borrowers actually used their loans to cover emergency situations, according to a Pew Charitable Trust report, which is a part of the Safe Small Dollar Loans Research Project.
You should only turn to a cash advance for an unexpected emergency, which you are capable of repaying in short order. Don’t rely on a bad credit loan to pay for a beach vacation, a plasma TV, or date night, because it will only perpetuate your personal debt!
Chloe Mulliner is an editor and writer for various credit and loan related consumer websites.