Your Lifestyle Could Be the Reason Why You’re in Debt
DEBT. The word has sheer panic attached to it when uttered. According to Northwestern Mutual’s 2018 Planning and Progress study, seven in 10 Americans at some point of time feel happy about their finances but a good portion also experience anxiety, insecurity and fear when it comes to money. For a majority of Americans, debt reduction was their top most priority. The number of people who were debt free decreased from 27% to 23%, credit card and mortgages were the leading causes of debts. Study shows a decrease in personal savings and unnecessary spending such as dining out and an active nightlife were among the primary causes of debt.
One of the finds of the study was that Americans are taking debt very lightly and pay little to no attention to their financial health. Having said that, financial health is as important as physical and mental health because as it was proved that debt can cause stress and anxiety. Is our lifestyle really to be blamed for our increasing debt? Let’s find out.
FOMO
Fear Of Missing Out, as millennials would call it, means that people want to be everywhere. They want to attend every party they get a chance to or that every latest collection should be in their wardrobe. Showing off their brand obsession is another reason for splurging aimlessly. Americans are spending more on wants than on needs. Although the study suggested that millennials have discipline when it comes to financial planning, only 40% have clarity on their financial situation. One in three millennials agree that they feel afraid and guilty when it comes to splurging.
Credit Card Debt
It will be fair to say that credit cards pay a big role in increasing the already existing debt pile. When paid by cash, pay check is the only limit one can spend to. Credit cards make people spend more than they have, making it look like that they can pay when the next pay check comes. What they fail to see is that with the credit amount, the interest which also gets included and they end up paying more than what they spend. With credit card companies pulling marketing tricks like cash backs and special discounts, consumers fall into the trap and ignore the financial charges that are generally hidden.
Medical Costs
Medical costs and expenses play a major role in increased debts. Many a times it happens that medical insurance does not cover everything and people end up having debts to pay for their expensive medical procedures and treatments.
Inflation
With every passing year cost of maintaining a household is increasing and with no annual raise to back them up, people end up taking loans eventually having more debt. Higher inflation can cause higher interest rates that may contribute in increased debt. So does that mean that we have to stop living? No, there are still rays of hope. There are certain changes to be made in lifestyle which can ease the burden of debt from our shoulders.
Personal Savings
As soon as the paycheck comes, one should set aside a certain amount as personal savings, only to be used in emergency. Though it may take sometime to form a habit, nonetheless it will be worth having your own small fortune if any adversity has to be faced.
Learning The Difference Between Needs and Wants
The biggest reason behind debt is splurging into things which we do not need. With companies using new marketing techniques to attract consumers, what we, as buyers, can do is set priorities, deciding and picking between what we absolutely need and what can be categorized as a mere wish. It’s not completely wrong to pamper oneself but planning before spending more than what one can handle will be an intelligent move.
Less Eating Out and More Grocery Shopping
When you cut down on dining out, you’ll notice that saves up a significant amount of money. Planning grocery shopping can also help in saving a few bucks.
The Joy Of Missing Out or JOMO is the new millennial trend to follow to save yourself from increasing debt. Slowing down and spending energy and time with loved ones, not only money, can not only boost your mental health, it also helps in making family bonds stronger. All in all, savings and prioritizing is the key to live a debt free life. Persevering with undeterred mindset will not only make our life free from debt, it will also be beneficial to have a solid bank account for the future.
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