Break Those Bad Budget Habits and Avoid Cash Advances

Every year thousands of people swear off bad habits as their New Year's resolutions, hoping to finally break free from the binding power of smoking, cursing, nail biting, or some other habitual vice. People are, after all, creatures of habit.

Habits are hard to break though, which is why many people make the same resolution year after year, only to practice the same routine they have always practiced. In some cases, bad habits are minor, with few serious consequences; in other cases, habits can be extremely detrimental to one's health and happiness. When it comes to one's finances, bad habits should always be taken seriously.

Cultivating bad budgeting and financial habits is like begging for an express ticket to the front of the credit card debt line. Because credit cards are easily accessible and readily available, many people cover bad budget decisions, such as shopping sprees and expensive social gatherings, with credit card cash advances. For instance, an individual may go on a shopping spree, draining his/her bank account, only to remember that his/her electric bill is due next week.

In such a situation, a credit card cash advance appears to be a great solution: pull out cash from the credit line and payoff said bill. However, doing so does not acknowledge the core issue: bad spending habits that increase credit reliance, essentially sweeping the debt under the rug until a later date. However, the date of repayment always rears its ugly head, creating more financial burdens.

An overspending habit is a surefire way to increase reliance on cash advances and other forms of credit. Often, people justify overspending because they have available credit; one may reason "I have the money available, so I might as well use it." This type of reasoning will only lead to bad financial habits that are likely to stick with the borrower a lot longer than the purchased item. Developing bad spending habits increases financial problems, which in turns increases more bad habits, such as cash advance reliance.

When one gets into the habit of purchasing things they don't need with money they don't have, they often end up with huge credit card payments that are nearly impossible to payoff. Frequently, people acquire more debt to maintain a quality of life because their habits have made them accustomed to it. They may feel a need to keep up the appearance of wealth or feel entitled to certain luxuries that are beyond their pay grade. In order to keep up with their bad spending habits, they rely on credit card and cash advances. This results in amounting large quantities of debt, which increases their debt ratios and harms their credit scores. The compilation of debt upon debt leads to all sorts of financial problems.

When swamped with debt, one's credit score goes down. Because 30 % of one's FICO score is based on one's debt ratio, maintaining high credit card balances can negatively affect one's credit. When one's credit is bad, it is much harder to acquire necessary funding, such as home or auto loans. This often leads people to high interest credit cards and loans, which make repayment even more difficult. If a person is unable to keep up with payments, it can lead to serious financial consequences, including bankruptcy and re-position of one's house or car.

Clearly, giving into bad budget habits like cash advance dependency can have serious repercussions. Now is the time to curb such habits by creating a reasonable budget and living within one's means.

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