thewisebudget 7 things you didn't know are putting you in debt

In recent years, more and more people have been getting into debt.

According to the Survey of Consumer Finances conducted by Federal Reserve, as of 2018, the average American under 35 years old has around $67,400 in debt. Those under 44 has around $133,100, while those under 54 has around $134,600.

The reasons for this alarming number are many and varied. One reason for this is the fact that people nowadays are getting more and more comfortable with carrying debt. Ron Rhoades, a finance professor who teaches at Western Kentucky University, says that “Before, most people would have already paid off their 30-year mortgage before retiring.”

There’s nothing wrong with being comfortable around things like debt, but you should be wary about things that could be making you sink lower. In fact, here are 7 things you didn’t know are putting you in debt.

Having Too Many Credit Cards

Having a credit card or two may be beneficial to you, but don’t make collecting credit cards a habit.

Many people tend to spend way too much when they know that they’re not going to pull out cash. Money is just all about the numbers and when those numbers are just showing on your phone’s bank app, they may not mean that much to you.

I have a few friends who I know have been swept up in the “swipe life” as I call it. They swipe away wherever we go. Absolute convenience. Sometimes I envy that, the feeling that sky’s the limit and that I can just “buy” whatever I want whenever I want.

But that’s not the truth and I know it. I’m sure they do too, especially every time they receive their credit card statements. Suddenly, that impulsive buy while shopping at their favorite mall doesn’t look so nice anymore.

If you really want to use different accounts, why not try using debit cards or prepaid credit cards instead?

Only Paying The Minimum For Everything

According to Lucia Dunn,  professor of Economics at Ohio State University, when it comes to consumer debt, younger people are apparently “taking on debt at a higher rate and paying it off at a lower rate”.

Many people, especially those who really couldn’t afford their spending in the first place, would rather opt to pay less for a longer period than pay more for a shorter period of time. They’d pay only the minimum each month, carrying the balance over to the next months.

This is because paying only the minimum gives them the illusion that they’re not putting out too much money when in truth, the longer payment term means that they’d be paying more money in the long run.

Remember, if you’re only able to pay the minimum for everything, perhaps ask yourself if you should even be using a credit card.

Buying Way Too Many Cups of Coffee

Did you know that every day, the whole world consumes about 2.25 billion cups of coffee?

Just think about it. There are 7.7 billion people in this world, and every day, 2.25 billion cups of coffee are consumed. If each person only drank 1 coffee, then 2 out of every 7 people you meet are drinking coffee. Whether or not we’d like to admit it, it’s our addiction to coffee that has allowed Starbucks to earn $5.6 billion in one quarter alone.

Coffee is one of the greatest extra expenses known to modern man. It’s not necessary (don’t kill me coffee lovers!) and we can definitely live without it, but a lot of us find it essential to have at least one (or two, or three, or four) cup per day, even if we can’t afford it. As a person who also loves her iced lattes, I know exactly what that feels, but the truth of the matter is, sometimes we just have to exert some discipline and stop ourselves from buying so much of what is essentially a non-essential item.

If you really love coffee, why not invest instead in a coffee maker? Or learn to make your own iced lattes at home. It’s much cheaper and you get to make your drink in your own way.

Keeping Up With Social Media Too Much

It’s fun to be on social media, isn’t it? You get to see your friends, your family, or other people going about their daily lives.

And maybe that’s exactly the problem. You get to see other people, how they’re living their life, where they’re going, even what they’re buying, and that gets into your head.

Let me ask you, have you ever seen a friend’s post that shows them in some fantastic, warm and sunny place off the coast of some island while relaxing on the beach and thought, “I wish I were on vacation too”?

Or maybe you came across a post showing your coworker’s new BMW and you thought, “Man, maybe it’s time to upgrade my Prius.”

The more you scroll through your social media feed, the more you see all these posts and photos pointing to a rich and fun life. The more you’ll be tempted or at least want to do anything in your power to be or have the same things as them. Sometimes, even if it means getting in debt.

Just remember, most of the time, what you see online isn’t an accurate representation of real life. If going on social media does nothing but make you feel worse about yourself, perhaps it’s time to take a break.

Shopping For Way More Things Than You Need

Dave Ramsey has once famously said, “We buy things we don’t need with money we don’t have to impress people we don’t like.”

This is true. One of the biggest factors that get people in credit card debt is impulsive shopping with their plastic.

Shopping in itself already takes up a huge chunk of the average person’s credit card debt. Just imagine all the things that are put on the card. Anything from groceries, gadgets, clothes, and whatnot can be charged to your card.

This becomes a problem when it has already gone way over the limit and you can’t or won’t stop it.

Try to be more frugal if you can. Of course, this also requires some discipline on your part, but it gets much easier the more you exercise it.

Spending Too Much On Going Out

How much money do you spend when you’re going out to eat?

If you’re like the average American, you probably spend around $3,000 a year just by eating out. If you go out every week, that means you spend around $57 on food everytime you go out. Add the costs of usual ‘going out’ activities like watching movies at the cinema or going shopping and you’ll see how easy it is for this amount to skyrocket.

It may seem like you’re just “splurging every now and then”, but don’t ignore how much you’re spending. Even the littlest things add up over time, and this certainly does. Why not try some cheap alternative? If you’re hanging out with friends, why not have a picnic at the park? If you’re going with your SO, maybe you can just stay at home, binge-watch Netflix, and eat home-cooked food.

There are a lot of alternatives to spending outside, you just have to get creative.

Not Having A Budget

Did you notice the trend in this whole article?

That’s right, almost every single item on this list has something to do with doing something way too many times. Like everything else in life, too much is never a good thing. When talking from a financial point of view, this is where budgeting comes in. And not just any kind of budgeting– wise budgeting.

In a nutshell, budgeting your money is just to prevent you from exceeding your limits. When you exceed your limits, you’re taking away money that could be used instead for your savings or for your debt and putting it on things that may or may not be very important.

If you don’t know how to budget your money, it’ll be hard for you to get out of debt.

What do you think? Do you recognize any of these 7 things you didn’t know are putting you in debt? You may know someone who’s finding it hard to get out of debt. You may even be that person. If you are, don’t fret! There are a lot of ways to get out of it, you just have to be patient and disciplined.

If you want to start your getting-out-of-debt journey, take the first step with my eBook, “The Dos and Don’ts of Wise Budgeting”! You can get it for free just by subscribing to my newsletter below. 

3,530