My FICO logo $$$$$$$$$$$ 9876 5432 1234 5678 CREDIT CARD KELLY SMITH 11/26 My FICO logo
SCORE
Skip Navigation
  • Why FICO
  • How It Works
  • Pricing
  • Education
  • Community
  • Support
  • Member Dashboard
  • Log In Log Out
  • Start Plan
 
  • Why FICO
  • How It Works
  • Pricing
  •  
  • Education
    • Credit Education
    • Credit Scores
    • What Is a FICO Score?
    • FICO Scores vs Credit Scores
    • FICO Scores Versions
    • New FICO Scores
    • How Scores Are Calculated
    • Payment History
    • Amount of Debt
    • Length of Credit History
    • Credit Mix
    • New Credit
    • How to Improve Your Score
    • How to Build Credit
    • Credit Reports
    • What's in Your Report
    • Credit Bureaus
    • Inquiries
    • Errors on Your Report?
    • Blog
    • Calculators
    • Loan Savings
    • Vehicle Payments
    • How Much Can I Borrow?
    • Should I Consolidate My Credit Cards?
    • Know Your Rights
    • Identity Theft
    • FAQ
    • Glossary
  • Community
  • Support
  • Member Dashboard
  • Log In Log Out
  • Our Products
    • Ongoing Credit Monitoring Track your FICO® Score & identity
    • One-time Credit Reports Be prepared for important transactions
  • How Can We Help
    • Monitor Credit & Identity
    • Mortgages
    • Credit Cards
    • Auto Loans
  • Credit Education
  • Community
  • Support
  • Our Products
    • Ongoing Credit Monitoring Track your FICO® Score & identity
    • One-time Credit Reports Be prepared for important transactions
  • Credit Education
  • Credit Scores
    • What Is a FICO Score?
    • FICO Scores vs Credit Scores
    • FICO Score Versions
    • New FICO Scores
    • How Scores Are Calculated
    • Payment History
    • Amount of Debt
    • Length of Credit History
    • Credit Mix
    • New Credit
    • How to Improve Your Score
    • How to Build Credit
  • Credit Reports
    • What's in Your Report
    • Credit Bureaus
    • Inquiries
    • Errors on Your Report?
  • Blog
  • Calculators
    • Loan Savings
    • Vehicle Payments
    • How Much Can I Borrow?
    • Should I Consolidate My Credit Cards?
  • Know Your Rights
  • Identity Theft
  • FAQ
  • Glossary
View all Personal Finance articles

5 Habits That Could Easily Put You in Debt

April 20, 2017, by Rob Kaufman

There are a lot more than 5 habits that could lead to debt, but because of the restriction of space (and attention span), we're going to focus on what we consider the top 5.

We're all probably guilty of practicing some of these ... at least once in awhile. The problem occurs when we start to do them all the time and they truly become habits. Overspending on a small gift for yourself a few times a year shouldn't put you in debt. It's when you overspend every week or with every paycheck that you start to build the road to debt - a path on which you want to stop and turn around - then walk away from as quickly as possible.

Habits to Avoid Debt

Nobody wants to feel the burden of debt. It's scary, frustrating, embarrassing and causes way too much anxiety. Take a look below at 5 habits we feel you should avoid in order to help keep you far away from this worrisome (and credit-damaging) burden.

  1. Failing to keep an eye on your credit report.

Have you checked your report lately for errors that might be lowering your credit score? Have you looked to see if an identity thief might have opened an account in your name and is putting you in debt without you knowing about it? It's imperative to know what's going on within your credit reports (from all three credit reporting agencies) so that you can fix any mistakes and stop identity thieves in their tracks!

  1. Waiting to create a budget.

The longer you wait to budget your money, the quicker you could find yourself in debt. Not being intimately involved with your numbers - from current income and expenses to future income and expenses - could mean you'll have to charge more and/or steal from the funds you've set aside for emergencies. Carefully determine how much you can actually spend each month and stick to it no matter what... your debt-free future depends on it.

  1. Not starting an emergency fund.

Think about those unanticipated expenses caused by illness... auto problems... job loss... appliance breakdowns... Do you have an emergency fund set up for those expenses? If not, you might have to borrow money to pay for these things and that can start the debt ball rolling. Review your monthly bills and receipts to get a good idea of how much you're currently spending each month. That will allow you to set up a savings goal and figure out how to fill your fund with the money required for six months' worth of expenses.

  1. Charge vs. cash.

Are there times when you could've paid with cash and/or a debit card but chose to pay with a credit card instead? Smaller purchases for which you charge instead of pay cash can quickly add up - especially if you already have a balance on that credit card. Unpaid balances mean interest payments that add more money to your outstanding balance. In the end, the balances grow, as does the debt, and you're caught in a debtor's trap. It's a better choice to pay lower cost purchases with cash instead of putting more stress on your credit card... and your peace of mind.

  1. Abusing balance transfers.

It can be a good idea to transfer balances on high-interest rate credit cards to lower interest rate credit cards as long as you don't charge on the new card and pay off the balance before the expiration of the introductory rate. As you can imagine, some people start to use the new credit card for additional purchases (which might incur a different or higher interest rate) and pull themselves further in debt without even paying off any of the initial balance. Again, if you're going to transfer a balance to another card, the only transactions on that card should be payments to pay off the balance. Otherwise, you'll just be spinning your wheels. Find out if you should try a balance transfer card in our blog post.

You can learn more at myFICO.com and see what others are doing to avoid debt in the myFICO forum.

Rob Kaufman

Rob is a writer... of blogs, books and business. His financial investment experience combined with a long background in marketing credit protection services provides a source of information that helps fill the gaps on one's journey toward financial well-being. His goal is simple: The more people he can help, the better.

Estimate your FICO Score range

Answer 10 easy questions to get a free estimate of your FICO Score range

740 - 790
Estimate for Free

Instant Access to Your FICO® Score

90% of Top Lenders Use FICO® Scores. Do you know yours?

Get Access Now!

Page footer

Products

  • Home
  • Why FICO
  • How It Works
  • Pricing

Learn

  • Education
  • Community
  • Support
  • Blog

Company

  • About Us
  • Terms of Use
  • Privacy Policy
  • Affiliate Program
  • Accessibility

Get Our App

  • Download iOS app on the App Store
  • fil_get
    Get Android app on the Google Play Store

Follow Us

  • Twitter
  • Facebook
  • Instagram

Credit Education

  • Credit scores
  • What is a FICO Score?
  • FICO Score versions
  • How scores are calculated
  • Payment history
  • Amount of debt
  • Length of credit history
  • Credit mix
  • New credit
  • Credit reports
  • What's in your report
  • Bureaus
  • Inquiries
  • Errors on your report?
  • Calculators
  • Know your rights
  • Identity theft
  • FAQ
  • Glossary

Copyright ©2001- Fair Isaac Corporation. All rights reserved.

IMPORTANT INFORMATION:

All FICO® Score products made available on myFICO.com include a FICO® Score 8, and may include additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Scores and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.

PRIVACY NOTICE: When you visit this website we collect your browsing activities on our site and use that information to analyze and research improvements to the website, and to our products and services. When you register for our products and services, we also collect certain personal information from you for identification purposes, such as your name, address, email address, telephone number, social security number, IP address, and date of birth. Further information is available in our FICO Data Privacy Policy. For visitors with visual disabilities, access to this website, including our FICO Data Privacy Policy, is available through assistive technologies, such as BrowseAloud, JAWS, VoiceOver, Narrator, ChromeVox, and Window-Eyes. More details on software and accessibility are available at WebAIM.org.