Overspending: An All Too Common Financial Mistake

by: WilliamBlake
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Word Count: 522

People write out checks to purchase things when they know full well that they do not have the necessary funds in their account much more often than most would care to admit. Although common, this bad habit can lead to poor financial management and debt later on down the line.

Accepting a job means you will either receive a salary or be paid for work hourly. Either way, the exact amount of your paycheck can be affected because of raises, bonuses, or varying the number or hours you work each week, but most people are paid the same amount on a regular basis. Unfortunately, many people spend more than they earn on a regular basis.

One cause of this is the "buy now and pay later" trap. Knowing that the first payment is two years away gives consumers a false sense of security. They may have walked into the store to purchase a bed, and end up walking out with the entire bedroom set because they don't have to make payments until 2009!

Keep in mind, though, that if you could not afford to buy the bed you wanted to look for, buying even more expensive bedroom furniture really does not make a lot of sense. Not having to pay for two years is no guarantee that you will have the money you need to pay for your furniture then either.

Credit cards can also be a trap if not used with discretion. Statements come at the end of the month. Erroneously you might think that although you don't have the money now, you will have it when the bill comes due. The problem with this thinking is that you haven't figured in the budget the money you just charged to the card. Once you pay the other bills, there won't be enough to pay the card balance so you pay the minimum. An unpaid balance on the credit card results in a larger balance next month even if you don't charge anything else.

We have to learn to be financially responsible or the debt situation will worsen. More people will file for bankruptcy or pay credit counselors to fix the debt problem. While these options are available to help those who have gotten deep into debt find their way out, far too few people take advantage of the help that is offered.

For some, having at least some kind of debt has become a way to fit in with others, even being considered as some sort of status symbol by some. Many individuals think that, so long as they are always able to pay their minimum monthly payment on credit cards, they can be in debt without problems. This means, however, that they will end up spending more in the long run because of interest rates.

Overspending will be a problem as long as there are available sources of credit. Future consumers can be affected by today's buying habits, since they are learning from this generation's actions. It is important to think about just what it is that they are being taught.

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