Today, I want to talk about bad financial habits that you need to break if you want to change your financial situation. I will cover good financial habits that you need to start practising next time.

Stop relying on your credit card

For many years, I had been treating my credit card as free money. I knew I would have to pay back everything I spent on it one day, but as long as it wasn’t today, it didn’t bother me too much. You guessed it, this way of thinking got me into big financial trouble!

Stop relying on your credit card and treat it as free money. Not only will you have to pay back every penny that you borrowed, you will also incur interest charges if you keep carrying a balance on your credit card. Interest charges vary depending on a credit card but an average interest rate is 18.9% APR. Madness!

If you are in a situation where you are working your way out of debt, you should probably stop using your credit card completely. It is easy to swipe a card to pay for your purchase. Using cash for every purchase can make a huge difference as letting go of cash is much harder!

These days, I don’t rely on my credit card, and I don’t carry a balance. I learned how to use a credit card to my advantage. I am currently earning money whenever I use my rewards credit card instead of wasting it!

Stop making minimum payments

This is one of the biggest traps that will cost you loads of money! If you carry on making minimum payments on your credit card, it will take you many years to repay your balance in full. Your minimum payment will cover your interest charges, but there won’t be much left to pay down your principal amount of debt.

A lot of people fall into this trap and spend years making minimum payments on their credit cards. I was one of them! I am not entirely sure how much of my hard-earned cash was wasted but I’m sure it was way more than I would have liked.

By making an overpayment of just £5, you will have paid off your credit card sooner. Alternatively, you can apply for a 0% credit card and transfer your existing balance to your new card. You will pay a balance transfer fee, but it will save you cash in the long run. Start paying down your credit card balance as soon as you possibly can and have it paid off by the time your 0% deal comes to an end.

Stop impulse buying  

I know what it feels like to walk into the shop, see something that looks fabulous and get the urge to buy it right.this.second. The desire to purchase something new becomes so strong that you stop thinking straight.

Stop for a second! Whether it’s a gorgeous new dress or a new shiny gadget that you laid your eyes on, think whether this purchase will add value to your life. Do you need it? Can you afford it?

I used to buy a lot of things on impulse that I didn’t need and couldn’t afford whether they were on sale or at full price. I was unable to control my urge to spend money and couldn’t leave a department store without something nice for myself. Once I started watching my spending and sticking to a budget, I realised that I need to learn to control my urge to spend.

I made a rule never to buy anything on impulse. Instead, if I saw something that I thought I needed, I would give myself a 14-day cooldown period. If I was still desperate to buy it after two weeks, I would allow myself to go for it if I could afford it. Strangely enough, I never bought anything I thought I couldn’t live without once these two weeks were up!

Stop ignoring your debt

Until 2013, I had been ignoring my debt for 10 years. I was under the impression that my debt would somehow magically disappear, and I wouldn’t have to deal with it. Wouldn’t that be great, right?

Chances are, your debt will not disappear. Your financial situation will keep spiralling out of control until you make a decision to change it and start working your way out of debt.

Also, it is a bad idea to ignore your creditors and the letters they send. It is always best to pick up the phone, dial their number, explain your situation and see if they can help. A few years ago one phone call to my bank saved me a ton of money that I would have otherwise wasted in interest charges.

Don’t run away, face your fears and start building a brighter financial future today!

To Conclude

Getting your financial life in order isn’t that hard after all. It requires a bit of a discipline and a strong desire to turn things around. It is important to quit your bad financial habits and start practising good ones. Over time, you will learn to control your spending urges and make better financial choices. It feels amazing to be in control of your financial life instead of letting money and debt control you!

What financial habits did you have to quit, if any?