Spending money is a requirement for life in the modern world, but there are good and bad financial habits, and the bad ones can easily lead to unmanageable debt. If left unchecked, debt can land you in collections or on the verge of bankruptcy. To help you avoid these possibilities and recognize unhealthy financial choices, here are a few common money habits that can lead to debt.

What Money Habits Lead to Debt?

1. Charging Consumable Goods

Consumable goods are essential everyday items that you need to live, such as food, gas, water, and electricity. While most grocery stores, gas stations, and utility companies will gladly accept a credit card for payment, this is not a good spending habit to get into. If you do charge consumable goods, always pay the full credit card balance at the end of the month.

2. Not Checking Credit Reports

While lenders, financial institutions, and collections agencies aim to report your data accurately to credit bureaus, mistakes can get made. These mistakes have a direct impact on your credit score, which can then hinder your ability to do everything, from renting a home and buying a car to even getting certain jobs. Check your credit report at least once a year. If there are any errors, such as a collection action that you paid off still showing up as unresolved, contact the credit bureau directly and file a dispute. All major credit bureaus allow you to file disputes online.

3. Making Minimum Payments on Credit Cards

Financial challenges may make it difficult to pay anything more than the minimum balance on a credit card. From time to time, that's OK. However, always try to pay off as much over the minimum as you can. Otherwise, you're only paying fees and interest and not making any dent in the debt itself, which will just continue to accumulate more fees and interest. Also, always pay your credit card on time; even paying one day late counts against you and can affect your credit score.

If you're in financial hardship or facing substantial collection action, explore your debt-relief options with an attorney. Arndt Buswell & Thorn S.C. has been serving clients throughout the Monroe County, WI, area since 1991. They offer professional and dependable representation in bankruptcy claims. Call (608) 269-1200 or visit them online to schedule a consultation.