In this new economy, it is essential that we begin to take responsibility for the financial decisions that we make. Sure it's easy to blame the government, our parents, inflation and our students loans for our personal money woes but true transformation can only occur when we stop blaming others and learn new behaviors that will help us transform our financial futures. Here are five bad decisions that are keeping you in debt.
1) Not Investing in Yourself - Why is an investment in yourself the safest investment that you can make? When investing in yourself you have the most control of over what happens, primarily through the actions that you take. Invest in yourself by growing and developing your own talents. Always dreamed of writing a book? Pay for that publishing workshop to help get you started. Do you want to become a manager in your current company? Take professional development training, even if it's not paid for by the company you work for. If you invest in something from which you expect a return, the dividends may be seen personally and professionally. It can improve both the quantity of your income and the quality of your life.
2) Keeping Up With the Kardashians - We live in a country that is infatuated with social status and appearances. Unfortunately, this obsession with vanity is keeping the majority of Americans in debt. Dismiss your desire to buy only certain designer brands and focus on the true value of the product or services that you are receiving. Truth be told, most "designer" brands specialize in marketing (perceived value), and not true value. It also doesn't help that we watch the fabulous lifestyles of the wealthy on television and then emulate them. Remember, your favorite television stars have sponsors. You don't.
3) Failure to Distinguish Between Needs and Wants - How many times have you run out to get that new tech gadget that costs $500 without even blinking an eye? Or what about the 30% off dress that matched your shoes perfectly? Sure, these items bring immediate satisfaction, but how do they impact your long-term strategy? Do they coincide with your goals? We tell ourselves that we must have a certain item or that we had to buy it, partly top curb our guilt and justify an ill-advised purchase. Take the time to decide what you truly need to accomplish and then determine what you want.
4) Not Having a Budget/Plan - Forty-nine percent of Americans don't keep a household budget, so essentially half of Americans have a very vague idea of what their monthly income and expenses are. Can you see why so many people are in debt up to their eyeballs? Don't worry. A budget will not keep you from enjoying your money. A budget is simply a plan for your money and is used to keep you on track financially. This is especially useful during those "moments of truth" when you have to decide whether or not you can afford your current purchase. I will echo the words of Lewis Carroll. "If you don't know where you're going any road will get you there."
5) Lack of Financial Education - We have taken time to learn how to use computers, how to find the best prices on groceries and how to take care of our pets, but only a few of us have taken the time to increase our financial IQ's. Sadly, some of the greatest financial advice around is available on the internet, for FREE, yet most of us fail to take advantage of it. I have come to the conclusion that we either don't care or don't really want to face the truth about our finances. I understand that it can be very intimidating to look at a mountain of debt and try to create a plan to attack it, but merely waiting for it to go away is the worst strategy of all. Be proactive and learn how to kill the financial weeds growing in your garden before it becomes a rainforest.