Connection Between Debt and Unnecessary Spending

[Mika]

Getting a loan to start a business, make an investment, or buy assets can be considered a good strategy because you are basically using debt to build wealth. However, if you get a loan and if you do not use your loan to make a monetary return, you might get into bad debt. When you have bad debt, you will be in a lot of financial trouble.

One of the primary reasons for getting into bad debt is your unnecessary spending. A lot of people have this mistaken view on what should they spend on and when should they stop spending on it. A lot of people have this mistaken view of spending, they tend to mistake unnecessary spending for essentials.

If you have a debt and are having difficulties paying off your debt, the first thing you need to do is to avoid unnecessary spending. Cut your expenses (even if it means downsizing your life) and use the surplus money to pay off your debt.

 

[Shaf]

I've seen so many people get into debts and I think it's easy to stop that habit, but it is not so. For many salary earners, they tend to get debts with the hopes of paying back immediately they get their paycheck. This leads to bad financial decisions that culminate into bad debts over time.

People have also developed the bad habit of needing to impress others especially online. This makes people to borrow money for luxurious lifestyles or expensive items they can't pay for. Some will take loans to pay back the loans they are owing and the cycle never stops.

The most important rule of getting out of debt is to live within your means, or even below that. Living below your means will give you the ability to save money, which can be used for emergencies or as investment, which are situations that will require you to borrow money.