7 Habits Leading You Into Debt

Some habits make it a lot harder to save money — or to stop spending it. Because sometimes our routines lend themselves to parting with money without giving it a second thought. (I have heard that you can stop at Target for a single item, but it’s not something I’ve managed to accomplish.)

In fact, there are some identifiable categories where it’s extra-easy to spend more than you had intended. Some of these even involve honorable intentions, but if you find yourself doing these things routinely, try to imagine a flashing “Warning, warning, warning!” sign. Then, maybe it will be just a little easier to take control.

1. Online Shopping (Deals & Downloads)

Shopping online is so convenient — you can download a book or subscribe to the deal sites, or that of your favorite retailer, and be among the first to know of a really great deal. In particular, the deal sites can be very seductive. An air balloon ride at an astonishingly low price, an art class, a massage — all at rock-bottom prices. In many cases, it’s things you didn’t know you wanted until you found out you could get them for so little money. And then there are the downloads — books, TV shows and movies you can summon for your immediate enjoyment. And if you start one and it’s just so-so, getting another is easy and quick. Plus, there’s no stack of books or DVDs to remind you of all those purchases.

2. Eating Out, After-Work Drinks or a Starbucks Habit

If you work in an office where it seems that everyone has lunch out, it’s easy to do it, too. And if you work at home, it’s easy to justify the need to get out for a time. Or sometimes it’s nearly dinnertime, you have nothing prepared (or even in mind), and you’ve worked hard and it would just be so much easier to go out. If you can afford it and think the expense is worth it, fine. But if you’re looking for a place to save, it might be better to check your pantry instead of grabbing your car keys. And, as with downloads, once consumed, those drinks, dinners and lattes are easily forgotten until you have to pay. (For some, paying for little indulgences with cash can help avoid an unpleasant surprise later.)

Likewise, socializing is good. Nobody wants to sit at home counting the money saved by not having any friends to have dinner with or to go out with after work. But when it becomes the routine and not a planned get-together, it can begin to be a real drain on finances.

3. Grand Gestures (‘This Round’s on Me!’)

Feeling magnanimous? Make sure you keep in mind that the size of the group you’re buying for makes a big difference. It’s easy — and fun — to be generous, and it’s usually appreciated (the people in commercials look really happy to see a new car with a big red bow). But if making grand gestures becomes a habit, it can easily erode your finances. It might be time to look for less expensive ways to share in a spirit of celebration.

4. Smoking

It’s an indirect way of setting fire to hard-earned dollar bills, and it can lead to health problems (it is also really hard to stop if you have a habit, so we’re sympathetic). Even quitting can be expensive, with various programs and medications designed to help smokers become former smokers. If you haven’t started but are tempted to, think carefully about the costs to your finances and your health.

5. Wandering the Aisles at Stores

It’s not that you need anything, but since you’re already in the store, why not check out the clearance racks? Maybe the blouse you thought was overpriced last shopping trip is now there, just whispering your name. You need to come a little bit closer . . . It’s not just women and clothes, either. A male friend once confessed that he thought he would be a little less free with his spending if Home Depot required a $100 deposit to walk in the door and just told him how much more he owed when he left. He maintained that he could not go there for a hammer without buying much, much more. (That’s why I can’t get out of Target for less than $50 a time.)

6. Gambling/Lottery Tickets

You already know the odds are not in your favor. And you may see it as a form of entertainment, like going to the movies. And if you do it that way, you’re probably not the casino’s favorite customer. Your limit’s your limit, and when you reach it, you’re done. Except that’s not usually how it works. Some casinos give their favorite customers a “free” hotel room, knowing they will still come out ahead.

Even if you’re not playing the ponies or betting on blackjack, you may be routinely buying lottery tickets at the grocery or convenience store. And chances are, you’re wasting money just a little at a time. But if Mega-Millions is at a record jackpot and you can buy a shot at it for a dollar . . . well, that’s not a habit, is it? That’s very different from buying tickets every week and joking that it’s your retirement plan.

7. Paying Late or Paying the Minimum

The way you pay your credit cards can actually make your debt worse. If you pay the minimum — and it’s an easy habit to get into — you will make little progress on paying your balance. If you continue to use the card, your balance will grow. But there’s something worse than paying the minimum: paying late. Paying late can trigger a penalty interest rate, and a higher interest rate will make that debt more expensive to repay.

Better is to pay your balances in full and on time. Keeping your balances low can also help your credit scores, and good scores in turn help you get lower interest rates. (You can calculate how interest rates affect your lifetime cost of debt.) Paying late will be noted on your credit reports and can result in a lower score, which may lead to higher interest rates and a more limited selection of financial products — plus, in some cases, higher rates for insurance.

Some Habits That Help

While habits can make it easy to do mindless spending, they can also help keep your finances on track. Here are a couple of habits that can potentially save you some trouble later:

Reviewing Your Credit Card & Bank Statements. This is one time you want to be bored. Make sure you see every charge and transaction. You may find you are paying for services you no longer use, or that a subscription you no longer want has auto-renewed and you can save by canceling. If there is something you don’t recognize, investigate it. Identity thieves find it far easier to go unnoticed collecting 300 $9 charges than to lift $2,700 from a single account. A small charge can be your first indication that your identity has been compromised; don’t think it’s too small to bother with.

Checking Your Credit. Whether you use a virtual calendar or hang one up in the kitchen, make a date on it to check your credit. You can get a free score from Credit.com, updated every 14 days. A sudden, unexplained change in your score can suggest something is amiss. You are also entitled to a free credit report once a year from each of the three credit-reporting agencies. Some people recommend staggering these, so you check a credit report every four months. Again, anything you don’t recognize should be investigated. A same-name mixup or an incorrectly entered Social Security number could affect your credit health, and problems are more easily addressed early on.