Being in debt can be a huge weight on anyone’s shoulders. Debt can cause strain in relationships and add a tremendous amount of stress to a person’s life. Sometimes the best way to learn about how to avoid debt is to learn from other’s mistakes. Here are a few of the biggest mistakes that people make that get them into debt. By learning from these money mistakes, it may help others learn what not to do to avoid debt in the future.
Failing To Budget
One of the biggest money mistakes that can lead to debt is failing to take the time to budget their money. The act of simply writing down how much money is coming in versus what is going out can be the difference between financial freedom and the worries of debt. If you are one of many who are struggling with how to make a budget, Kimberly Palmer, contributor for usnews.com, provides some smart ways to improve your budget like taking into account not just the month but the entire year and avoiding temptation.
Spending More Than They Can Afford
File this under no-brainers, but it does happen to a lot of people who then end up in debt. People who have shopping addictions, love to gamble, or love to keep up with the Joneses can easily get into debt by simply spending more than they are bringing in. By avoiding the compulsion to online shop or heading to the casino, people can do themselves a huge favor for themselves and their money.
Co-Signing a Loan
Some people simply have a giving heart and want to help out a family or friend by co-signing for a loan but it is actually putting them in a very bad position. Money experts agree that there is a reason why the lender wants a co-signer and that reason is because likely the friend or relative won’t pay, leaving the person who was trying to do good with a strained relationship and a whole lot of debt.
Not Putting Any Money in Savings
By not putting any money into savings, people set themselves up for potential financial ruin. Just think about how expensive one trip to the ER is or repairing a broken down car. One expensive bill and no savings to dip into will automatically put a person in a situation where they will have to pay for that bill with a loan, credit card, or finance it. By budgeting to put away a little money in each month for emergency situations can make all the difference concerning an individual’s financial well-being.
It is best to learn from the mistakes of others and avoid becoming a slave to debt. Not only can these mistakes lead to a pile of bills, but debt can lead down a road of bad credit, difficulty getting loans, bill collectors, and even foreclosure. Steer clear of these money mistakes to ensure that digging yourself into debt won’t even be an option.