Debt is a part of money management. It’s not the nicest part, of course, but it’s one you’ll have to navigate carefully throughout the course of life. After all, it can be quite easy to fall into debt when you don’t consider your true means. 

And that’s something a lot of people have to deal with day by day. Many families have large debt repayments to cope with, whether this is an auto loan, mortgage, credit card, or all three. While making payments on time every time is good for your credit score, it can impact on your budget in everyday life. 

Many parents also want their kids to grow up with a smart sense around money management, and that can be a hard lesson to teach when you’re worried about your own level of debt. 

So let’s go through the various ways people fall into debt by accident or without realising, and what you can do to be careful about these issues in the future. 

Overspending on a Credit Card

How often do you put a purchase on your credit card? It can be useful to do this every now and then to ensure your credit score stays in a good spot, and then to make the repayment on the balance as early as possible. 

However, it can be incredibly easy to resort to a credit card without even thinking. When this happens, you can easily overspend, venture near your credit limit, and even go over it. That could leave you with thousands to repay and no emergency credit to make use of when you need it. 

Interest can mount rapidly, and the longer you have to pay off an outstanding balance, the more interest you’ll have to deal with. That can land you in ‘persistent debt’, and that means you never clear the balance you owe. Instead, you’ll be left with debt that only exists because you were in debt in the first place. 

Not Considering the Realities of a Loan

Taking out a loan, for anything you might want to purchase, is a risky decision. It’s not something to ever do lightly or on a whim; you need to know what you’re agreeing to and how long the repayment and interest terms will last. 

Consider these issues for as long as possible before you take any action. Weigh up your options when it comes to the loan you’re after, and be sure to always cross reference against your budget in the long term. 

Say you want to buy a new car. If you don’t set up a proper budget sheet and use it to make a decision, you won’t know the kind of car you can afford. This means you’re much more likely to end up with a hefty auto loan – the kind that seems shiny on the surface, but will drag down your finances until the car you bought has to be repossessed. 

Relying on Delayed Payment Schemes

It’s become second nature for online stores to offer a ‘buy now, pay in 30 days’ option at their checkout. Klarna is a very well known provider of this, and nearly everyone who’s bought something online is going to have considered making use of this kind of payment model once or twice. 

But if you’re someone who prefers this form of payment when shopping online, you could very easily end up living beyond your means. Buying a few things across the course of a week, with all of the payments due in 30 days’ time, could make next month a very expensive one on your budget! 

Stop yourself before resorting to a delayed payment scheme, no matter how often you use them, and think about what is also going to be going out around the same time. 

Not Using a Budget Sheet

Budgeting is key to living within your means and ensuring your financial health in the long term. Without a bit of regular budgeting, you’re never going to have a firm understanding of what you’re bringing in and what’s going out month by month. A budget sheet makes this much easier to track by putting all of the information in one easy to access place for you. 

You can quite easily set up a budget sheet as there are templates online for it, and you can adapt any one of them to fit your household. Download a few and see how they work out for you, and watch as your income and outgoings become a lot easier to see in real time! 

Not Tracking Your Spending

Similar to the above point, if you don’t do a budget sheet each month, you should at least keep a spending diary. If you already have a good idea of your fixed expenses compared to your income, this diary can be used to track the variables. These are the expenses you don’t always make, or they’re the expenses that can sometimes be cheap and other times be very costly. 

Without an idea of your spending habits, you won’t ever be able to get on top of debt. You’re more likely to fall into it and then be hit by a massive bill at the end of the month, which you may never have seen coming. Get around the impulses of spending by giving yourself more information to work with! 

Stay on Top of Debt

Falling into debt is easier than you may think. What was once a concept you couldn’t imagine having to deal with is now a reality you need to try and keep up with. But the more we can take the slide into debt back into your hands, and remove the intimidating feeling of taking care of debt, the better we’ll all fare! 

Stay on top of the common problems above and think about where and when they could impact on your financial health; we all have risk periods when it comes to debt, but we can do our best to avoid them too.