Finance Roll

Like a 1000 pound gorilla, indebtedness weighs us down and keeps on the pressure with seemingly no relief in sight. But, like any supposedly unbeatable foe, the steps to victory are always present. We need only discover what they are and maintain the discipline to execute, sometimes against all odds.

Debt can be likened to the proverbial snowball rolling down the hill. There are two ways to deal with it. You can position yourself at the bottom of the hill and be crushed by whatever finally comes crashing down, or you can anticipate that thunderous, yet predictable, end and plan for a successful conclusion. Unfortunately most us are positioned at the bottom of the hill waiting for the inevitable. I have read that our thoughts become our actions, our actions become our habits, and our habits become our destiny. The way we think about debt determines the way we act regarding it. The actions, when repeated, form habits that will put us on a course to either financial prosperity or financial ruin. The habits, if left unchecked, will define our financial destiny. Statistics indicate that we've developed bad habits. Little things add up fast. Let's look at what we are doing to get that snowball rolling. I have outlined 7 habits we develop that have a negative impact on our financial future.

Living on a budget is a bad thing. Budgeting is such a no brainer that I was reluctant to even mention it, but, I realize that many face financial problems simply from a lack of planning. I used to think of a budget as a wimps way to live. My financial philosophy was to make enough money to pay for your lifestyle and things would work out. Boy was I wrong! Everyone can benefit from deciding on certain amounts for spending and sticking to those amounts. Plan for fixed costs and prepare for small surprises by saving a percentage of income.

Charging instead of paying cash or using a debit card. I can't count the number of times I've used a credit card to purchase consumable goods. How many times have I charged for merchandise when I had the money to pay for it? If you carry a balance month after month means that you are paying interest charges on the merchandise and subsequently paying more for it.

Making minimum payment when the bill comes. Instinctively we translate purchases to the amount of the monthly payment we can afford. This kind of thinking causes us to over spend. Repeating this behavior causes us to habitually evaluate purchases based upon our ability to make the monthly payment. Once we have purchased enough to get our monthly payments to the maximum amount we can afford, the debt could take the next thirty years to repay should we make the minimum payments monthly. We are in a situation where we are feeding the thousand pound gorilla.

Making the credit payments late. Who can't afford $39 a late fee? Well, there's a lot more at stake here. This is a gross waste of money. Not to mention that the credit card company will declare your account as default and will double and sometimes triple you interest rate. The unfortunate thing is that this not only affects the account that was late, but your other credit accounts as well. Now, sit back and watch that next month's "minimum payment". Keep in mind that not one cent of the extra money being paid is paying down the principle amount. This is all additional interest charges and fees.

Transferring the balance of a higher rate card to one with a no interest introductory rate can be an effective strategy if you can follow through. If you keep from making purchases and can manage to pay off the balance before the introductory period ends. Most people however, continue to spend and have even more debt once the introductory period ends. I personally have implemented this as a step to becoming debt free and know that this takes exceptional discipline. Don't do this if you have not developed the habits of successful credit management.

Using retail store credit cards to make purchases so that you can get a discount on the purchase is a bad thing. Don't do it. Each time someone dear to me does this, conflict arises between the two of us. Once the emotion of the situation has subsided reality sinks in and the payoff of this purchase becomes paramount. The retailer's cards generally start at a higher rate making it even more important to pay in full. If you fall prey to the trap of securing one of these cards and pay on it monthly your financial well being is in jeopardy.

Not contacting creditors when you are unable to pay. Let's face it, life happens. There are many reasons for not being able to pay your bills, Job layoff, physical injury, sickness, etc. Let your creditors know when you face a situation that impacts your ability to pay on time. Begin the process of damage control as early as possible.

I summary financial success can be achieved by applying some simple disciplines. Budget your income and save whenever possible to prepare for unexpected expenses. Pay cash whenever possible. Only use credit only for merchandise with a possible return. Never fall prey to the retailers offer for discount on purchases by applying for credit card. Don't develop the habit of paying the minimum balance on credit card balances. Should you feel yourself sinking under the weight on the 1,000 lb gorilla, the temptation will be to look for the quick fix. This is bad on so many levels. You will usually end up with bigger problems. Contact your creditors as soon as you sense trouble brewing. Protect your credit score at all costs.