Do you have a spending problem? If you are currently struggling with so much debt, it might be a sign that you have a problem with how you spend your money.
Of course, there is a possibility that you have just been a victim of an unexpected event – or a series of it. Sometimes, people go through expensive and unexpected medical treatments that left them with a lot of medical debts. While this is unfortunate, you have to realize that this is still rooted in the fact that you did not spend your money well. If you are not prepared for emergencies, that means you failed to prioritize emergency expenses. The purchases you made in the past may have been important to you then, but it was obviously not as much of a priority as the emergency expense that landed you in debt.
With this reasoning, you will realize that almost all financial problems are caused by bad spending decisions. As the cost of living increases, the threat becomes even more pronounced. According to the Bureau of Labor Statistics, the American household spent an average of $60,060 in 2017. With an income of $73,573 before taxes, consumers are cutting it close. It is easy to assume that a lot of Americans are living from paycheck to paycheck.
If you are using up almost all of your paycheck each month, that is an indication that you have a spending problem that needs to be addressed immediately. And if you have some debts that you also have to pay for, there is a solution that can deal with both. That solution is called debt consolidation.
How debt consolidation can help a bad spending problem
Understanding how debt consolidation can solve your debt issues is easy. But what about your spending habits? How can it be corrected by your efforts to consolidate debt?
Here are three reasons why consolidating debts can also correct your spending problems while solving your debt issues.
It shows the effects of your spending habits
Before you can consolidate, you have to take a look at every single debt that you owe. Only then will you get an idea of how much you really owe and what accounts you can consolidate. This activity will help you realize the effect of your spending in the past. How did you arrive at your debts? Is your debt mostly caused by credit card debts? If the answer to the last question is yes, that means you spent too much money and that landed you in debt. You overspent on your credit cards and now you are struggling to pay it back. By looking at the type of debts that you owe, you can make these conclusions that will help you understand how your spending influenced your current financial situation. In other words, it can pinpoint the cause of your bad debts.
It will encourage you to organize your debts
Once you realize how bad your debts have come, it should encourage you to do better in organizing your debts. In effect, it will motivate you to manage your money wisely while you are completing your debt consolidation program. When your debts and other aspects of your finances are organized, it will be easier for you to stay in control of all your debts. That will help you feel more confident in your abilities to improve your financial situation. Not only that, but it will also give you what you need to make smarter decisions.
It is not an easy way out
Finally, your spending problem will be addressed by debt consolidation because it will teach you that there is no easy way out of debt. Consolidating debts will not bring debt reduction. You have to pay for all your debts until the last penny. That means you will feel how hard it is to get out of debt. This should remind you of what you have to go through in case you land yourself in another tough debt situation. That should be a great way to motivate yourself to make better spending decisions.
Signs you have a spending problem
The truth is, you do not have to wait to be in debt before you should deal with your spending problems. As soon as you realize that you are not spending your money wisely, you need to do something about it.
But how will you know if you have problems with how you spend your money?
Here are some of the signs that you have a spending problem.
Maxed out credit cards
Take a look at your credit card balance and see if you have maxed them out. That is a clear sign that you have a problem with controlling your spending urges. According to reports, 1 out of 3 Americans admitted to being scared of maxing out their cards. This means they are aware of their inability to control their spending habits. Once you have maxed out your cards, that can quickly lead to a lot of problems for you financially. You need to avoid this as much as possible so you can keep yourself from a bad debt situation.
If you also find yourself keeping purchases are secret, that is another sign of a problem. You need to ask yourself why do you feel the need to do that. You should not be ashamed of the purchases that you have made – unless you know that you should have never bought them in the first place. If you are feeling guilty about your purchases, that means you are doing something wrong. Your subconscious might be telling you that you have a spending problem.
Treat shopping as therapy
Another sign of a spending problem is when you treat it like therapy. When you are feeling bad, you have a strong urge to shop to make yourself feel better. That is one of the biggest mistakes that you will make. The truth is, you should never shop when you are feeling any kind of emotional high – may it be positive or negative. It affects your judgment. That means you are more likely to spend more than you should.
If you see that you have one or more of these signs, you might want to be more cautious about how you spend your money. Even if you are not yet in debt, there is a high chance that you are on your way to being one.