5 Financial Choices That Cost You More Than You Think—and How to Change Them

There are two ways to find money to attack debt: make more or spend less. Even if your income is as high as it can realistically be right now, you have the power to create more cashflow. It’s time to comb through your daily financial life and find small habits that cost you big. It's never too late to create new habits that make you feel more financially confident—and now is a great time to start. 

Let’s take a look at some common money habits. A few small changes could add up to big financial progress.

1. You Don’t Know Where Your Money Goes

It's essential to know how you spend your money. Every extra dollar you spend is a dollar you didn’t spend paying down debt. If you know where you spend money, you can make conscious choices with every dollar, and put it toward what you think is most important. Some days, that’ll be a latte. Other days it’ll be your credit card balance. But you won’t know what you’re working with unless you’re tracking your money.

Create a bare-bones budget. This type of budget is a temporary spending plan that eliminates unnecessary purchases. Reduce your monthly expenses and keep a close eye on your spending to free up more of your money for debt repayment. It doesn’t have to be forever.

2. You Prefer Not to Think About Your Debt

It’s normal to feel overwhelmed by debt. But ignoring debt won't make it disappear. 

Make a debt payoff plan and give yourself permission to feel good about being in action. 

Consider debt repayment strategies like the debt avalanche or debt snowball. 

Don't let overwhelm stop you from reaching your goals. Lots of strategies exist to help you get to a debt-free life, and there are even professional debt experts to help guide you. 

If your debt is so crushing you’re not sure what you’ll do about it, get a free debt evaluation from a professional debt relief company like Freedom Debt Relief.

3. You Forget to Pay Yourself First

Paying yourself first is a personal finance building block. It means saving a set amount of your income before you spend money on anything else.  

Whether you want to save for the future or pay off debt, pay yourself first. If you don't make your future self a critical bill to pay, you might sabotage your goals without even realizing it.  

Want to reduce your debt faster? Get in the habit of directing some of your paycheck to debt repayment before you spend it on other needs outside your everyday living expenses. 

4. You Only Make Minimum Payments on Credit Cards

Another money move that typically leads to growing debt is making only minimum payments on your credit card. If you only pay the minimum amount listed on your credit card statement, you'll pay interest. And the payment amount is designed to keep you in debt for a long, long time. 

Paying just the minimum means you'll end up with a larger balance next month because your unpaid balance will carry over, along with interest charges. The longer this cycle continues, the longer it will take to pay off credit card debt. Every extra dollar will help you get to the finish line faster and break the cycle of credit card debt. 

You can avoid paying any interest charges at all by paying your entire statement balance in full every month. 

5. You Don’t Pay Your Bills On Time Every Time

Late payments can cost a lot. When you pay a bill late, your biller may impose a late fee. An easy way to have more money to put toward debt is to avoid paying unnecessary fees like this.

Paying your bills late could also cost you in other ways. You could end up with a negative mark on your credit report. Late payments stay on your credit history for seven years, so even one late payment could cost you more than you realize. (Credit card payments aren’t reported late until they’re 30 days late.) 

Set reminders or set up automatic payments. Make it a habit to pay bills on time. You’ll save money and maintain your credit standing. 

Be Willing to Learn New Financial Habits 

It’s never too late to make adjustments to how you manage your money. It can take time to develop new financial habits. But it's possible to take action and improve your financial situation. 

Want to get out of debt for good? Here are some debt relief solutions to explore:

• Debt consolidation could streamline your finances and help you pay off debt faster. Replacing multiple high-interest debts with a new lower-interest loan could lower your interest costs.

• Debt settlement is when you negotiate with creditors to accept less than you owe and forgive the rest. 

Need help determining your next steps? 

Get a free evaluation from a reputable debt relief company.