imconfident

I sincerely believe that it is far more beneficial and far less costly to help a child build confidence than it is to fix an adult who has little or none.

Getting into the debt trap

on June 20, 2014

It is so easy today to get into debt.  Buying on credit, careless spending and improper financial planning can easily cause damage to your finances and throw you into the debt trap.  Once you are caught, it is very hard to get back on track again.

Many people get into debt because they have developed an entitlement mindset.  They believe that they deserve to have everything they want.  It doesn’t really matter if they have enough cash to pay for what they want, they will just put it on credit and pay for it later.   Some people will even ignore the needs of their families and waste money on things they don’t need instead of buying food and paying the bills.

The world tries to trap us with these encouraging statements:  you deserve the best, shop till you drop, just charge it, treat yourself, pay later.  This sounds like a good idea until the credit card statements come and you can’t even pay the minimum amount.

Many of the things we buy are things we don’t even need.  I’ve bought things in the past that I’ve put in a cupboard or drawer and forgotten about.  Then years later when I’m cleaning, I find the item with the price tag still attached and wonder why I even bought it.

Have you ever considered how much money you spend on stuff you don’t really need?  There is a huge difference between needs and wants.  We sometimes confuse these 2 words.  Often we say we need something and believe that it is important when actually it is only something we want and could do without.   I wanted to see how much money I spent on things I don’t really need and this is what I figured out:

  • COFFEE – If you buy 2 coffees a day at $1.60 – in one year you will spend $1168.00.
  • EATING OUT – If you eat out at a restaurant once a week and spend $80.00 – in one year you will spend $4160.
  • TAKE OUT – If you bring home food once a week and spend $40 – in one year you will spend $2080.
  • CLOTHING – If you buy 1 new item of clothing each week and spend $50 – in one year you will spend $2600.
  • GROCERIES – If you buy extra snacks, sweets and treats each week when you buy groceries and spend $40 – in one year you will spend $2080.

These are just a few of the things that I used to buy that I didn’t really need, but I was convinced that they were necessary.  It didn’t seem like much money was being spent, but when I started figuring out the costs for a year, I was amazed.  The total was over $12,000!!!  For items like food and clothing!!  Then you also have to consider the interest being paid on these items.

Digging yourself into debt is not fun and it takes a long time to recover.   Make sure you are spending your money wisely.   Don’t get yourself into a debt trap.

For great financial advice, check out Dave Ramsey, who is a radio host and a trusted voice on money.  He is a best-selling author and his books are awesome.  Check out his website at http://www.daveramsey.com.

 

 

 

 

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