If you are one of those who simply can’t resist passing by a shop window without being able to step inside and buying a thing to two for your bulging wardrobe, you can be pretty sure that you will have a bank account that’s empty and a huge pile of unpaid credit card bills at the end of every month. If you seem to be constantly scrambling for money to cover your overspending on clothes and fashion accessories, then you are not exactly alone. There are literally millions of Americans who are driving themselves deep in debt traps due to their obsession with fashion.
Knowing You Are Overspending
The main trouble is that most people do not even realize on time that their fixation with fashion is getting them into deep trouble. To many people, spending recklessly on fashion is a way of feeling fulfilled and happy. What they don’t appreciate is that such a lifestyle can only lead to an insurmountable debt trap that will bring a lot of pain and unhappiness. Some signs that can alert you:
Thebudget Issue: If you find that you have been overspending every month, simply because you’ve ended up succumbing to fashion items, then you have a real problem on your hands.Being stylish is definitely good for your image; however, not being able to afford groceries, mortgage, or the due taxes is not.
Credit card limits are exhausted: This is a very clear indication that your lifestyle is unsustainable and also you are catering to your overspending by using other resources like credit cards. If you have reached the limit of your cards then it is very likely that you are attracting steep interest rates as well as possibly missed payment penalties.
You are only making the minimum due payments: If yourcash flow is under strain so much that you are only being able to make the minimum due payment, it is a clear indication that you are overspending. You are also paying a lot of interest unnecessarily and it will take years of efforts to pay off your outstanding in this manner. You can read debt settlement reviews online to see how the calculations are worked out.
Monthly income is lower than credit card debt: If the accumulated credit card debt is significantly more than your monthly income, it is a clear indication of your overspending. Your card debt needs to be always lower than your income so that you are in a position to clear it fully every month.
Your wardrobe is fuller than your bank account: If you are one of those whose closet is spilling over with clothes, and accessories like shoes and bags, many of which still have their tags on while your credit card bills are mounting up, then you should know that there is a problem with your lifestyle.
Getting a Hold on Your Finances
The first step in taking control over your finances is to acknowledge that your profligacy on fashion and style has created a problem and that you need to take positive action to improve the situation. Some tips on how to approach it:
Make a budget: This is as simple as making a list of all your sources of income and the expenses that you need to incur every month. Include your expenses on the home mortgage, living expenses, repayment of the car loan, education for the kids, entertainment, utilities, etc. Tally the fixed expenses first and see how much of a surplus you have after they have been accounted for. Remember that you will need to manage your household in the identified surplus amount as well as divert something to saving. This could be a very tough call but with a little scrutiny, you will be able to identify areas where you can cut down and make it happen.
Lock up your cards: If you are really intent on sticking to your budget, then you should make it a point to lock up all but one of your credit cards so that you can resist the temptation of making impulse buys more easily. Just keep one card with you for the real emergencies otherwise use only cash that you can allot yourself on a weekly basis.
Tweak your lifestyle: Invariably, the biggest saving will come out of tweaking your lifestyle to something more practical. Knowing that your fixation with fashion has led you into debt is a good start. Adjust your spending habits to purchasing apparel and accessories that are more reasonably priced.
Set yourself short-term and long-term financial goals: When you have accumulated a mountain of debt it can be really puzzling to figure out what to tackle on a priority. Make out a list of the debts with the highest interest rates and try to pay them off first. Try to plow in at least 15-20% of your weekly income into a bank account to create an emergency fund. Restrict shopping to bare essentials and stop dining or entertaining. When you get to a stage where you have been able to make some headway, it is the time that you set yourself some long-term goals like purchasing a new car or going on a vacation that will act as a motivator for you to continue with your plan of getting back on track.
The first step of getting out of a debt trap created by your obsession with fashion is to appreciate that you have a problem and then start working on solving it. However, the only long-term solution is to adjust your lifestyle so that you can sleep better.