In every part of our lives we have good habits and bad habits, some more costworthy than others. The focus of this episode, however, is a few common bad habits around the important topic of money. Listen in and see if you have any of these 5 toxic habits:
Credit Cards
Since inception, opinions have been split on credit cards. Like anything, there are smart ways to use them and actions that can lead to catastrophic consequences. Modern banks now offer the ability to transfer outstanding credit card balances for a “reward”, however you are the one who is in fact paying the price. Host Andrew Baxter points out that transferring debt is just moving money out of one place and into another, neither of which are particularly helpful. The banks are happy to service the action because they will collect a fee for doing so, and the other credit card company is happy to take on the debt because you will still owe the interest on the current balance on the card. Ensuring you spend responsibly on your credit card is vital as you can very quickly find yourself in a very deep hole with the interest expense just compounding and building over time. Regularly transferring debt through credit cards could hurt your credit score and even if you manage to claw your way out of debt, your chances of borrowing for more sensible purposes in the future could be stifled with the hit that would inevitably come to your credit score.
Buy-Now-Pay-Later
Gone are the days of only using BNPL services for online shopping and larger purchases. Now, you can go out for a few drinks with your friends and end up paying off the cost over a few weeks. If you are a regular listener then you know Host Andrew Baxter has never been a fan of Afterpay and its constituents. Now more than ever, the lending on everyday purchases has become predatory and adding to the cost of everything you might buy. As a matter of fact, Andrew compares being able to BNPL on a round of drinks as predatory as ATM machines next to the blackjack table in the casino. The worst part is if you are using Afterpay or an alternative for a round of drinks, the only thing you’ll have to show for it is the ensuing hangover the next day. Our suggestion – if you’re one of those people with a long list of purchases on Buy-Now-Pay-Later plans, try to get it paid off as soon as you can.
Eating Out
Recently, Australians have had a tendency to head to their local cafe for breakfast rather than eating at home on the cheap. Every now and then it is not a huge issue, but if you find yourself spending more than double on a meal you could have made at home multiple times a week – it might be time to slow down. Host Andrew Baxter explains how within a couple of decades Australia’s national GDP has gone from being constituted 0.5% by eating out to now 2.4%. There are so many instances where we think to ourselves “I’ll just grab a coffee” or whatever it may be, but we would all benefit from thinking about just how much we spend on food and whether that money could be better spent elsewhere.
Big Spending
Recent economic conditions has made it tough on many Aussies to save a solid portion of what they make, and sometimes it simply is not possible with the cost of fuel, rent, and all of the other expenses that go along with life. Host Andrew Baxter notes, however, that if you are in a position to save some of your money you certainly should. Any book from a money expert will tell you to ensure you store away some portion of what you earn for the future when possible and not saving is simply not a sustainable way to build wealth. If you get to a point where you are struggling and end up looking for a way out, this desperation can lead to thoughtless, emotional choices that may exacerbate the problem rather than help. So be mindful of your spending habits whether it be shopping or food or otherwise and make sure you are always in a position to make a sensible, objective decision.
Failure to Invest in Yourself
As the cliche goes – If you’re not growing you’re dead. Everyone has a tendency to get comfortable with where they are or be dissuaded from having a go due to bad news circulating in the media. Host Andrew Baxter strongly suggests maintaining your discipline and setting time aside to invest in yourself. It can be hard sometimes, but a small shift in your mindset can change your inner voice from “I have to do this today” to “I get to do this today”. Some things can be out of reach and that’s okay, no matter how big or how small, if you are willing to invest time and occasionally money into self-improvement, the rewards will come.
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