There are many reasons that most of us have debt. Some debts are unavoidable, like your home mortgage, or car payment. What is common are some attitudes we have about debt, and what is acceptable. Changing the way we think about carrying debt can ultimately help us get out of debt.
One of the most common myths about money and personal finance is that we can or should buy something because we deserve it. We have this false sense of entitlement in regards to our spending that causes us to create debt problems. We think that since we work really hard for something, we deserve to buy it regardless of cost.
This myth can be particularly challenging for those of us who have a tight financial balance. If you are someone who has difficulty saving but generally manages the rest of their finances well, you may buy things on credit and create unnecessary debt.
Let’s say you have been in the market for a home computer for a while. One day you notice an ad in the local paper that talks about a weekend sale on home computers. Naturally, you rush down to the store that placed the ad to check out the possible deals.
When you get to the store, you quickly see all of the great specials on home computers. You are also able to quickly identify a model that is well within your price range. This model has most of the features you want, and has all of the must-haves.
Not far away from the reasonably priced model, you spot the grand pooh-bah of home computers. This model has everything you want and need in a home computer, plus many features that you only dreamed and heard about. This computer is more than you have saved and budgeted for.
You know it costs more than you intended to spend, but since you can get it on a store credit card, you buy it anyway. Hey, you work hard; you provide for your family and acknowledged that you would need the more expensive model to accommodate your family’s usage.
You work hard, your family needs it, and therefore, you deserve this more expensive computer right? Wrong! You deserve a computer that works for your needs and that works for your budget. By getting the more expensive computer, you created more debt for yourself. You also put unnecessary pressure on yourself to work harder in order to pay for the added expense.
By convincing yourself that the more expensive unit is worth the added burden of paying for it, you have endorsed the theory that you deserve the best money can buy. What has really happened is that you allowed your desire for a new computer outweigh your sense of practical and normal spending habits
The way we should look at scenarios like this one is to recognize that any form of debt, no matter how big or small, is bad. We should also note that while we had enough money saved to buy an adequate computer, we chose to burden ourselves with the more expensive model.
We can overcome this set-back by being willing to limit our purchases on things we want and focusing on buying only what we need. By limiting our spending to things we need from those we want, we will be able to save more, which means we can eventually get out of debt.