A lot of people will probably disagree but debt is not the main culprit for all of our problems. If you think about it carefully, it is our own personal habits and perceptions that should be blamed for our debt situation. Although the temptation is there, our self control, knowledge of personal finance and developed financial management skills should have been enough to override it.
Fact is, it is difficult to not be in debt in this consumerist society that we live in. If you want to reduce your debts, you have to get the connection between consumerism and debt. It will help you understand the effects on your habits and the way you spend your money. This is how you really get down to the root of the debt crisis in your life.
Here are a couple of habits that consumerism taught us that you probably should avoid.
- Justifying wants for needs. You have to be strict when it comes to defining what is a want and what is a need. If you have limited finances, you really have no choice about it. You should only buy your needs. This means letting go of branded products and just going for store labels. It also means buying second hand if it will save you a lot of money.
- Buying things because we can afford them. Smart spending is not just saying no to purchases that you cannot afford. That is actually the easy part. The hard part is saying no even when you can afford it. Putting aside that money to grow your savings could be more beneficial than making that purchase transaction.
- Practicing retail therapy. It is never a good idea to shop while you are on an emotional high. Regardless if it is positive or negative, it can override rational thinking when you are deciding to make a purchase or not.
- Get it now pay it later. Credit cards are actually teaching us to be impatient. You are given the ability to purchase something that you want right now even if you cannot afford it. You rely on a future income that in truth, may or may not come. We brush off the money we will waste on the interest rate just so we can enjoy something now. That is not really the best habit to develop. Most of the time, what we purchase are “stuff” that we really do not need. They usually depreciate in value even before we have finished paying them off.
Buying things is not bad because there are things that we really need to consume. But you have to separate the essentials from the not - especially when you know your budget cannot afford it. Also, debt should not be a complete taboo in your life. There are debts that has all the potential to do you good. Just think of it this way, if the debt will help put money in your pocket, then that is a good debt. If it will only take money from your pocket, then don’t get it. If you really need that purchase, just save up for it and buy in it cash.