Some of the types of debt that individuals have include: personal loans, auto loans, student loans, mortgages, and credit cards. Having debt is not necessarily a bad thing if you are using it wisely. The problem lots of people run into is that they begin to take on more, and more debt. Then at some point it seems like a huge burden that must be paid back. As the amount of your debt rises, so must those payments to satisfy what you owe. By having to put more of your money toward paying debt you are ensuring that those funds are blocked from being put toward more rewarding things.
Think about the amount of recurring bills you have signed up for. When I say recurring bills I am not referring to the necessities that you must pay to live your life. I am referring to those things that you feel enhance your life in some way so you decided to pay for it on a monthly basis. Gym memberships, massage programs, and organization costs are some of the recurring bills I am referring to. Dig even further and you find monthly expenses like Amazon Prime, music streaming services, wine of the month clubs, etc. So for all those monthly bills you pay to those things, how many are you able to use on a regular basis?
Now amounts like $5.99 or $8.99 may not seem like a lot of money, but it adds up fast. Looking at the amount you pay on a monthly basis makes that expense seem cheaper. Take those monthly amounts and convert them to yearly payments and you begin to see the bigger picture. $5.99 turns into $71.88 a year and $8.99 turns into $107.88. I know those amounts still seem small. So lets average the two amounts together, and assume that you have 10 recurring payments that fall into this category. This means that you pay an average of ($14.98 per expense x 10= $149.80 per month x 12 months=$1,797.60) a year for all those expenses combined. Now when you look at that you can see how nearly $1800 a year gets blown.
Buying food can be very expensive. It always feels like you are paying a fortune when you buy groceries at the store. But when you consider how many meals you can prepare the cost is typically less than if you were to eat out. Many workplaces across the country provide employee cafeterias, so it is common for employees to eat/pay for their meals there. If you are not eating in a cafeteria then maybe you are going out with coworkers for meals. Those costs begin to add up. Thats not even considering the fact that you may routinely buy coffee, deserts or something similar.
Companies design entire stores so that customers make impulse purchases. You think it is a coincidence that when you checkout at the grocery store you suddenly need that candybar or pack of gum. No, it is designed that way. Sales pitches, commercials, and bargains are designed to be executed for a limited time only so that you do not have enough time to consider not buying something. A lot of impulse purchases end up being unused which totally makes a lot of them a waste of money.
What You Can Do
Take a look at how you are spending your money and look at areas to improve on. Consider ways to reduce expenses and begin to save. The things you spend money on that add no value, cut those things. If you can justify that an expense saves you money or time then that expense is worth keeping.