Six Actions Guaranteed To Get You Into Debt
Debt is one thing that is big on our priority and mission at MoneyNotes. We are well aware that the impact of financial difficulties or debt reach beyond financial into stress and mental health.
As such we have been thinking of how to help our MoneyNoters and rather than add to the already large volumes of content out there about how to get out of debt, we thought we explored actions that get us into debt.
So let’s dive into these reasons
Action #1 Play Ostrich
It’s human nature in extreme danger to fight or take flight, actually most times we take flight! There is no cowardice in that, it’s how we have survived and evolved for so long. Most of us take the same approach with our finances which is not as dangerous a situation as the former. If we have cashlfow problems or are strapped for cash then we ignore letters, final warnings and overdue payments. We also don’t check the balance of our accounts when funds are low.
MoneyNotes says - This approach of playing the ostrich and burying our heads in the sand is all to familiar. In fact nearly half of british adults hide their debt from their family and friends according to Money Advice Service. It is important to take action, speak to someone., there are also debt charities out there waiting to help. Talk money to someone you trust as this can be liberating and help you navigate some of the debt traps.
Action #2 Keeping up with the Joneses or…Kardashians
This is as old as time itself. If you are trying to live a life that is not yours with funds you do not have then you will sooner or later find yourself in debt. This is even more heightened these days with the presence of social media where you don’t have to snoop around to find out how the other half lives, they pretty much tell you online!
MoneyNotes says - I know it takes a lot of mental strength not to be impacted by peer pressure but thinking about staying focussed on what truly makes you happy and comfortable will help you navigate material distractions from others. Besides, you have no idea how they are funding their lifestyle which could be fuelled by debt
Action #3 Spending more than you earn
This may sound obvious to most of us that If you keep spending more than you earn then you can quickly run into debt - Unfortunately most of us keep repeating the same mistakes. For some, It’s not all mistakes as there are a lot of families out there on very low income that just cannot make the sums add up.
MoneyNotes says - The importance of budgeting cannot be overemphasised . It gives you clarity on where your money is going, if you are overspending and what you can do about it. Not sure where to start with budgeting? Talk to us for an indepth budgeting bootcamp that will transform your finances.
Action #4 Not talking about money
This is a taboo in Britain and research from University College London, show that many of us would rather talk about what we get up to in the bedroom than talk money. Some of us even hide our debt from family and friends. In fact £96bn of debt is being hidden from family and friends.
MoneyNotes says - As it’s #talkmoney week, we encourage you to face the fear and talk to someone about your finances and debt, they may just have tips or know who can help out. If you are deep in debt and feel that there is no way out then please do not despair as there’s always a way out. Here’s one of our MoneyNoter’s journey through the depths of debt.
Action #5 Not having an emergency fund
If you don’t have one yet then you are not alone, more than 17 million Brits have less than £100 set aside for emergencies. Yeah ok, heard you Cyprian but how does this relate to getting into debt. Well, most debt especially those with high interest rate are taken out to meet emergency payments like parking fines, broken boilers, other unexpected maintainence cost.
MoneyNotes says - Emergency funds should certainly protect you against taking out unplanned loans to meet unexpected bills. Not sure how much to set aside in your emergency fund? Then read our Five Essential Family Financial Toolkit.
Action #6 Overspending during the festive period
Of course it’s the most wonderful time of the year, tools down and spending quality time with family and friends. Wholeheartedly agree with this but it’s also the period when retailers are looking to make up their sales for the year so be careful with your spending - Black Friday, Cyber Monday, Boxing Day etc All a ruse to get you to spend more.
MoneyNotes says - Yes I may sound like the grinch who is about to steal Christmas but budgeting around this time of year is extremely important.
Make a presents list and how much you plan to spend on each person and challenge yourself to come under budget whilst still maintaining quality. Shopping online will definitely help you stick to your budget and you can also try to get some cashback while you are at it.
If you earn a monthly salary then remember that your December pay would most likely be paid early so set aside money for bill payments in January and don’t end up with a personal debt christmas hangover
By being constantly aware of these actions and how they can get you into debt I hope you manage to stay clear or minimise your chnaces of getting into debt. Best of luck!