5 Surefire Ways To Go Broke
Watch Out For These Signs You’re Heading Towards Being Broke
Some people who lose all their money are just unfortunate.
Life deals them a bad hand, and that’s the end of the matter.
Most, though, fritter away their wealth by making basic errors and financial mistakes.
Here are the top five culprits.
Buying A Bigger House Than You Can Afford
Everyone wants to live in a large house, but relatively few have the income required to support one.
Even so, the allure of a large plot and lots of bedrooms tempts people to part with more cash than they should, eventually leading to hardship.
When buying property, buyers have a habit of ignoring all the associated expenses.
While the mortgage is the main outgoing, there are other expenses, including taxes, maintenance costs, and utility bills, which all increase as the property gets bigger.
Trying To Keep Up With The Joneses
As social creatures, we have a habit of comparing our financial standing to that of our peers.
If all our friends have fast cars and go on regular holidays every couple of months, we feel as though we need to do the same.
Trying to keep up with the Joneses when you don’t have the means to do so, however, can crater your finances fast.
You wind up spending money you don’t have and going into debt.
Eventually, you lose the opportunity to build a stable financial platform to generate wealth, thanks to debt and interest payments.
Spending Lavishly On Gifts
Some of us are giving by nature.
We want to lavish luxuries on the people we love.
Unfortunately, this type of excessive spending can soon land you in a world of financial pain.
When it comes to buying gifts, you should only spend the money you have.
Furthermore, you should focus on purchasing items that have meaning, not just those that are expensive.
Often, the most thoughtful gifts are the ones that people remember.
Failing To Understand Your Current Financial Situation
A lot of people wind up going into excessive debt because they don’t have a handle on their current financial situation.
They assume that interest payments on loans and credit cards will remain low, only to discover they don’t have enough income to pay their debts.
Keeping tabs on your financial situation, therefore, is essential.
Be sure to track all your monthly outgoings and work out what level of borrowing you can safely sustain.
Find out how much you pay in monthly interest.
Owning Too Many Credit Cards
Credit card companies make a lot of money by charging customers fees on outstanding balances.
Individual lenders will typically limit the amount that you can withdraw in any given month to stop you from exceeding your capacity to repay.
But you can get around these limits by taking out multiple credit cards.
Going down this route, however, is a recipe for disaster.
If you max out multiple cards, you can soon find yourself in a mountain of debt.
If you’re worried about going broke, it can help to speak to professional experts about your situation.
They can offer guidance and support to guide you out of a difficult situation.