There are certain habits that we may have that unconsciously prevent us from paying off our debt and getting ahead.
Following are seven habits that may be holding us back from paying off debt and getting back into the black. Remember debt matters, it is important to get ahead in order to turbo charge you journey into financial independence.
Not knowing your account balance
It is very important to keep track of the balance in your bank account. This is especially true is you know that the balance is a little low.
Banks will allow you to overdraft on your bank account but they will charge you very, very high overdraft fees.
It is therefore very important to watch your account balance and ensure that it remains in the black to avoid hefty fees.
Click here learn more on how to organise your finances with online banking.
Paying too much in fees
Fees, fees, fees. Banks charge us lots of fees to access our own money. That makes very little sense to me. If you have several different accounts, consider consolidating them into one, this could save you lots of money in fees.
Nowadays many banks advertise accounts with no fees. You have to be very clear because most of the time there are conditions attached to a no fee account. These condition could include a minimum monthly deposit amount r a maximum number of monthly transactions.
The key is in researching the various options and organising your bank accounts in a certain way to save your own money.
Paying only the minimum amount
If you have credit card debt, the only way to pay it off quickly, and to save lots of money in interest, is to pay more than the minimum monthly payment amount.
The banks are not interest in you paying off your debt. That is why they only want you to pay the minimum payment amount. They will keep on increasing your credit limit so long as you can afford to pay the minimum amount.
Don’t fall into this trap, do all that you can to pay more and reduce that credit card balance as soon as you can.
Click here to learn how to avoid credit card debt.
Taking credit card cash advances
We all know that getting a cash advance in our credit cards is a really bad idea.
When you do a cash advance you not only pay a lot more interest on it but you also start paying that interest from day one. The banks usually don’t give you interest-free periods for cash advances.
Conclusion, avoid cash advances as much as possible.
Not bargaining for the best deal
This can be a bit tricky but it has the potential of saving you quite a bit of money. Call your debtors and ask them to lower your interest rate. The banks want your business and with the increase in competition amongst the banks it is likely that you can succeed in negotiating a better deal with your current bank.
Ask for options. These days many banks offer credit cards with a set period of very low, or no interest at all.
There are credit cards now that offer you the first 6 months interest free for balance transfers. This can be a great help to turbo charge you payments and get the most out of your own money.
One word of warning. If you are looking at these credit cards look at the conditions and at the interest rate you will pay once the initial period of low interest rate is over. Some of them will charge a much higher interest rate than other cards so do your research before signing on the dotted line.
Not knowing where your money is going
One of the biggest mistakes one can make in personal finances is not knowing where your money is going.
Get a budget going, use your online banking to export your transactions into a spreadsheet or a personal finances software and ensure to track where your money is going.
Set goals to pay off your debt and track your progress against your goals.
Click here to learn how to create a budget and stick to it.
It may feel like debt is here to stay for a long time. This does not need to be true. The biggest mistake you can make is complacency. Take control of your finances so you can be out of debt as soon as possible,