Get Out of Debt by Kicking These 12 Bad Habits

Your debt will likely continue to grow until you can kick those poor financial habits for good.
Last updated March 28, 2023 | By Michelle Smith Edited By Michael Kurko
worried young woman in debt at home

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Debt seems like a necessary part of modern life, especially if you’ve made (or are planning to make) big purchases like a house or a car. However, debt can quickly spiral out of hand.

Fortunately, it’s never too late to replace bad habits with good ones. Here are some financial habits that will keep you trapped in debt forever, and budget-friendly actions you can take to climb out of debt.

You spend more than you earn

metha275/Adobe worried girl holding shopping bags

Spending beyond your means is one of the fastest ways to start racking up debt.

If you aren’t paying for those purchases now, you’ll have to pay for them in the future, and usually with a good deal of interest that won’t stop accruing until you pay off the debt in full.

Review your last few bank statements to figure out where you’re overspending and find ways to cut back.

Your spending increases with your income

artiemedvedev/Adobe unhappy woman calculates expenses on bills

It’s tempting to think that all you need to get out of debt is a better-paying job. While extra cash can cushion your budget, you should ask yourself if you’ve increased your spending every time you’ve gotten a raise in the past.

If the answer is yes, the amount of money you earn might not be the root of the problem. Instead, it could be that you’re used to spending everything in your wallet regardless of your pay rate.

The next time you get a new job, qualify for a raise, or pick up another side gig, check the impulse to spend everything you earn.

You don’t have an emergency fund

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An emergency fund helps you cope with unexpected financial crises, such as losing your job or experiencing a surprise medical emergency.

Without an emergency fund, your only option in a crisis is to go into debt, which is the last thing you want to do when you’re already in a stressful situation.

A typical emergency fund should have enough money to cover three to six months’ worth of expenses. Figure out what that number is for you, then start setting aside money from each paycheck to build your emergency fund.

You make a lot of impulse purchases

auremar/Adobe couple contemplating purchase

Whether you’re standing in the Target checkout line or browsing Amazon, it’s easy to see something you like, throw it in your cart, and buy it immediately on top of your regular purchases.

Consistently making impulse purchases ensures each shopping trip is more expensive than you’d planned, and that extra money can add up quickly.

The next time you’re tempted to buy something on a whim, tell yourself to back off for a day or two. Use that time to decide if you really want the item that caught your eye or if you’d rather save your money for a more intentional purchase.

You take on high-interest debt

Kawee/Adobe senior feeling worried about financial problem

Some types of debt are much better for you financially than others. For instance, a home loan or student loan might be necessary for you to invest in your future and start building equity.

In contrast, predatory payday loans usually have short repayment terms that are difficult to meet when you’re short on cash. Payday loans also have notoriously high-interest rates — some as high as 300%.

You spend without a budget couple looking frustrated

When you operate on a budget, you stick to spending a predetermined amount of money and avoid overspending as much as possible.

Without a budget, it’s much easier to spend money without considering if you can afford to do so, which makes it all too easy to wind up in debt.

Setting a budget is one of the best ways to keep your finances in line, so if you haven’t created one, try taking some time to do so as soon as you can.

You opt for convenience over cost

Tricky Shark/Adobe food delivery moto scooter driver

Services like DoorDash and Uber Eats charge a host of fees that make ordering with their apps much more expensive than just calling a restaurant yourself.

When you can, consider sacrificing convenience for the sake of saving money. While it’s fine to pay more for something just because it’s convenient, making a habit of it is a great way to overspend.

You spend money when your friends do

Евгений Шемякин/Adobe confused young woman

When your friends all want to splurge on something special (say, a bachelorette party or concert tickets), it’s hard to say, “Sorry, I don’t have room for that in my budget right now.”

As a result, you might end up spending more and more just to keep up with the crowd.

Try to be more intentional about how much you spend with friends. You might even consider letting them know you’re trying to spend less.

Pro tip: You’re probably not the only person trying to boost your bank account, and other friends will appreciate you speaking up.

You forget to make payments on time

Kaspars Grinvalds/Adobe desperate man struggling with personal finances

Missing a mortgage or credit card payment tacks on an extra late fee that you now have to pay along with the initial cost of the bill.

If you go too long without paying a bill, the consequences (and fees) get even direr, adding more debt on top of what you already have.

Fortunately, most bills can be set to autopay. As long as you know you’ll have enough money in your account to cover an automatic charge, autopay can help you pay down debt without accumulating more.

You have a hard time saying no

Reezky/Adobe woman showing refusal sign

Maybe you struggle to say no to a child, friend, or partner who asks for money, or maybe you have a hard time telling yourself no to purchases you really want.

Either way, saying yes to every request for cash can quickly run down your bank account.

Try taking a measured, intentional approach to spending and lending: Figure out exactly what you can afford to offer, then stick to spending precisely that amount.

You struggle to plan ahead

Wayhome Studio/Adobe man feeling depressed

Being able to budget requires you to look ahead months, years, and even decades down the road.

If you’ve made a habit of thinking about the now while avoiding the future, it makes sense that you’d struggle to motivate yourself to spend less and save more.

If you need help to grow your wealth, consider outsourcing the job to a financial advisor. They can help you figure out everything from how much you’ll need to retire to how interest will impact your current debts.

You don’t have a plan for paying off debt

Koto Amatsukami/Adobe couple having conflict over credit card bills

In many situations, the earlier you pay off your debt, the less interest you’ll end up paying. But it’s hard to do more than simply make minimum payments when you don’t have a plan in place to tackle your debt.

As part of setting a budget, look at how much money you owe, then determine how much you can afford to put toward paying off that debt each pay period.

You don’t necessarily need to pay off the entire amount immediately, but creating a clear plan with achievable goals can help you get back on track financially.

Bottom line

Кирилл Рыжов/Adobe woman thinking of managing her money savings

Just because you’re in debt right now doesn’t mean you’ll be in debt forever, especially if you prioritize changing your financial habits.

Rather than resigning yourself to a lifetime of debt if you see any of these warning signs in yourself, take steps now to set yourself up for financial success.

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Author Details

Michelle Smith Michelle Smith has spent a decade writing for and about small businesses. She specializes in all things finance and has written for publications like G2 and SmallBizDaily. When she's not writing for work at her desk, you can usually find her writing for pleasure near large bodies of water.