5 Habits That Are Probably Keeping You In Debt

This week begins a five day discussion on becoming debt FREE. You will read stories and get tips on how myself and others are overcoming debt and building wealth. I encourage you to join in on the conversation by leaving feedback and asking questions. If you have a debt freedom post or story you’d like to share please leave a link directly to that post using Mr. Linky below.

Becoming debt FREE has been a priority for my family ever since we realized that God never intended for it to be that way. We have made many adjustments to the way we think about money in an effort to be better stewards over it. We’ve realized that many of the choices we initially made concerning our finances are the very ones that lead us directly into debt. I have listed the top 5 below.

Using credit cards. This will be for some one of the hardest steps, but one that should be tackled first. If you can’t afford to pay cash for it, don’t buy it.

Not having a budget. Convert to a zero based budget system. We designate every dollar to a specific financial obligation or budget category before we earn it. As Dave Ramsey puts it, you’ll be “spending your month’s income on paper” before you spend it in real life. We don’t leave any money lingering around in our accounts. Unassigned money is more likely to be spent on impulse when it’s not attached to a specific category.

Keeping all of your eggs in one basket. Assign separate accounts for different long and short-term financial obligations. The benefit of having several accounts with several institutions is that you are able to take advantage of high yield savings rates and separate accounts also set up a barrier between you and your money.

Money that you need to access on a daily or weekly basis such as gas or groceries should be set up in an account that has a debit card and or checks attached to it. This type of account should be easily accessible. On the other hand, money that is designated for short or long term goals, such as taxes, home owners dues, etc. should be kept in accounts preferably with an account that is not as easily accessible. An example would be a bank that does not an ATM in your town, like an online bank. With online banks, funds usually take around 5 to 7 days for transfer into your central account or you’ll have to pay a fee for using an out of network ATM. Barriers like these will help deter you from spending money frivolously since you’ll need to jump through a few hoops to access the cash. You can set up accounts for as many or as few categories as you like. Opening a new bank account does not hurt your credit since bank credit inquiries are considered soft pulls.

You spend everything you earn.  Read this article to learn how we learned to live on one income. I talk about methods that helped my husband and I go from depending on two incomes to making all of our expenses not exceed just his income. This allows us to use my income for long and short term financial goals.

-Your throwing money out the window. You can save so much money by implementing  a few easy strategies. The 7 steps to reduce your utility bill will go a long way towards putting money back into your pocket. To learn more ways to save even more on utilities, my friend Jennifer over at Savings and Giving listed 6 additional steps to save on your utilities.

Using these strategies have allowed my husband and I to pay off all of our consumer and revolving debt. It’s been a challenging journey but the rewards out way the struggle. We are on track to paying off our mortgage in a few years and look forward to seeing what God wants to do with all the free revenue we’ll have to use for HIS service.

If you are in the process of paying off your debt be encouraged that it will be worth all of the sacrifice in the end.

This is part 1 of a 5 part debt freedom series.
Part I- 5 Habits That Are Probably Keeping You In Debt
Part II- Is Keeping Up With the Jones’ Keeping You In Debt?
Part III- Put the “BUDGE” back in Your Budget!
Part IV- Guest Post: My Financial Freedom Strategy
Part V- 4 Valuable Lessons I Learned from Being in Debt

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