How to Stop Bad Spending Habits That Make You Look Poor

At some point in your life or even now you have had at least one bad spending habit. My bad spending habits started in college when I was approved for my first credit card. This type of behavior leads to unnecessary debt and can lead to financial crises such as bad credit, collections, judgments or wage garnishments. 

These habits can be inherited from parents, relatives, siblings or friends. These habits usually start or are implanted in your subconscious as a child and stay with you throughout adulthood.

Determine where the bad spending habits started. Stop these bad habits now will save you time, money and stress in the future.  

Examples of bad spending habits are: overspending or spending more than you earn, impulse or emotional shopping, using payday loans or check-caused stores, using money orders instead of writing checks or using online banking; talking about your purchases and the cost.  Here are x way to stop bad spending habits that make you look poor. 

RECORD SPENDING HABITS

To stop bad spending habits write down your daily spending on paper and pen, Word or Excel or use a smartphone app. Assess your spending each week to determine areas where you can reduce spending. 

Create a budget to track spending or use a budget app. Create realistic financial goals to help you stay on track with your spending. Go on a 30 day spending fast. Stop charging and buy only basic necessities.

Use voice recording, set alerts or reminders when bills are due and any other tasks to help you eliminate your bad spending habits. Seek professional therapy to help change your mindset. 

DO RESEARCH

Comparison shop to obtain at least 3 price quotes to find the best deal. Search online and on social medial sites for discounts and specials. Sign up for email or text alerts. Use comparison sites like Amazon, Bizrate and Price Grabber or smartphone apps like BuyVia or RedLaser.

SET REMINDERS

Sign up for email or text alerts about coupons, discounts or specials on item your regularly purchase. Use cash back or rewards points earned to make purchases.

PAY LESS

You no longer have to pay full price for any item. You can comparison shop, ask for price matching or negotiate to obtain a lower price.  Reduce temptation when shopping and leave your debit card or check card at home.

Americans Spend At Least One Paycheck during the Holidays, Don’t Be One of Them

                                            

According to a GoBankingRates survey over 50% of Americans spend at least one paycheck during the holidays. While 22% spend two paychecks, 6% three paychecks, 4% four paychecks, 3% five paychecks and 9% six paychecks. Forty-four percent expect to spend two paychecks on more during the holidays. 

These alarming statistics indicate that Americans need to spend less and save more. It also indicates that Americans are not prepared for a financial crisis such as illness, divorce, unemployment, death of a loved one or a natural disaster.

These statistics show a lack of control, discipline, impulse buying and an eagerness to keep up with everyone else. If Americans saved money throughout the year they would avoid the holiday shame when their credit card bill arrives in January.

Advertisers knows that consumers are triggered by emotion so retailers create advertisements to heavily tap into consumers emotions to encourage them to spend more money. Holiday shopping should equal the amount of money you can comfortably afford to spend – money that will not be needed in the near future for another purpose. 

The best way to curb overspending during the holidays is by calculating how many hours it takes you to work to earn enough money to purchase a specific item. For example, if you feel the urge to buy a large flat screen television that costs $1,000 and you earn $998 each bi-weekly paycheck, it will take you 80 work hours to earn enough money to purchase the television. Here are 5 fantastic ways to avoid spending your paycheck during the holidays.

Create financial goals

Set financial goals that you want to achieve for the next five years. Every time you think about spending money determine how the purchase will affect your financial goals.

AVOID PEER PRESSURE

Ignore peer pressure your family, friends, colleagues, other parents or neighbors to purchase at item even it is for a good cause. If you can’t afford to purchase the item and purchase it anyway you are the only one who suffers.

REEXAMINE SPENDING HABITS

If you overspent during the holidays last year or earlier in the year, examine why you overspent and solve the root cause to prevent overspending in the future.

GIFT GIVING

Reevaluate how you purchase gifts. If you have a large family consider a secret Santa exchange so you are only required to purchase one gift for one person. If your family has a large number of children skip buying gifts for the adults and buy gifts for the children. Another option is to purchase gifts for your immediate family and work with your family to set a general spending limit.

SPEND LESS

Spend less money on those persons you purchase lavish gifts for in the past. If they complain tell them you are on a budget this year and need to stick to your budget. The amount of money spent on someone should not indicate your feelings for the person, i.e. if you spend less money it does not mean you care about them any less.

5 Simple Ways to Pay Off Debt

Many Americans have still not changed their mindset and financial behavior. Stock market volatility, administration changes and federal and state regulatory changes should make everyone improve their financial behavior. Many Americans allow fear to cause them to make hasty decisions. Don’t let fear lead you to make a decision you will regret in the future.

If you owe debt and have the money - pay it off. Forget about the rumors that others have said about keeping a balance on your accounts. Paying off debt will help you maintain a good relationship with your creditors, stop those harassing calls, increase your credit score and reduce financial stress.

To pay off debt you have change the way you think about money.  Money is a tool that can be used either to generate debt or to generate wealth. There are several ways to get out of debt. Use these five simple ways to pay off debt, increase your credit score and improve your financial life.

TRACK SPENDING

A budget helps you identify your total monthly income, how much you owe and how much you spending each month. A budget also quickly identifies areas where you may need to reduce spending. Use online banking or automatic paycheck deduction to pay bills. 

SPEND LESS

Buy needs vs. wants, control your spending, don't buy in excess or more than you need, keep debt (excluding mortgage or rent) at 15% of your total monthly income (after taxes). Keep rent/mortgage at 30% of your total monthly income. Reduce expenses by 30-50%. Delay purchases until you have the cash to purchase them.  

PAY IN FULL

Pay the balance in full each month prior to the due date or as soon as you receive the bill, which helps to avoid, paying finance charges. This also reduces your chances of going into debt and making late payments. 

PAY MORE THAN ONCE

Many consumers do not realize that they can send in payments for their debts multiple times a month.  Pay half of the bill balance with first paycheck of the month then pay the remaining balance with second paycheck of the month. Pay weekly instead of monthly or pay the minimum monthly payment the first week after you get the bill. Then each week pay as much as you can toward the monthly balance and repeat every month.  

PAY MORE THAN MINIMUM MONTHLY PAYMENT

If you pay the minimum monthly payment, you will end up paying 2 to 3 times what you actually purchased due to finance charges that accrue on your balance. Send more than the minimum monthly payment each month.

STOP CHARGING

Keep credit card balances at 20% or below the credit limit.  Having accounts with balances above the credit limit will decrease your credit score and may increase the chances of your credit limit being reduced or your credit card account may be closed.

How the Trump Tax Reform Plan Will Affect You

Everyone cringes when they hear any news about taxes. The tax code has been broken for years and has constantly favored wealthy tax payers. The Trump Tax Reform Plan is no different. To ensure you concerns are heard vote in the upcoming 2018 local election and state elections and write or call your U.S Congressman. Here are nine ways taxpayers would be affected by the Trump tax reform plan.

Healthcare

The Affordable Care Act (ACA) which provided health insurance to an additional 20 million people would be repealed. The new tax bill would eliminate $1.7 trillion from the ACA over the next decade or $1.7 billion per year. Low-income and middle-income taxpayers would be affected the most. Approximately 30 million taxpayers would lose their healthcare coverage. Medicaid would be reduced by $610 billion.

Social Programs

Social programs like TANF and SNAP that provide food and other benefits for low-income taxpayers would be greatly impacted. The Pell Grant that provides financial aid for college students would be reduced. A total of $1.2 trillion would be reduced from all these programs.

Tax Increase

Low-income and middle-income taxpayers would see a tax increase. The current system of seven income tax brackets 10%, 15%, 25%, 28%, 33%, 35% or 39.6% would be reduced to three: 12, 25 and 35 percent. The majority of taxpayers would see a 2 percent increase. Wealthy taxpayers’ income tax would be reduced by 5 percent. The child tax credit and earned income tax credit (EITC) would be reduced by $38.9 billion.

Standard Deduction

Single taxpayers could deduct $12,000, and married couples could deduct $24,000, a $5,600 reduction but both groups would no longer be able to deduct additional exemptions.

Parents

Taxpayers would no longer be able to deduct exemptions for their children. However they could apply for a larger child tax credit up to $1,600 per child.

State and Local Taxes

Taxpayers would no longer be able to deduct income or sales tax and would only be allowed to deduct up to $10,000 in property taxes.

Estates

The estate tax exemption would double. Estates with asset of $11.2 million or less would not be taxed. After six years the estate tax would be eliminated entirely.

Small Businesses

The bill would favor large companies and tax income from smaller companies such as an accountants at individual rates.

Homeowners

The homeowner deduction would be limited to $500,000 for first-time mortgages. Mortgages on second homes would no longer be tax deductible.