10 Bad Money Habits That Block Your Path to Riches

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Achieving financial freedom requires more than just earning money; it also involves smart spending and saving. Here are 10 money habits you need to break if you want to build wealth and ensure a more secure financial future.

AUTHOR: Chris Phelan

1. Taking on Credit Card Debt

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While opening a credit card account may seem like a surefire way to get ahead of bills for a month, in the long term, it's a move that keeps poor people poor! Much like predatory auto loans, credit card interest rates are sky-high, reaching 25% for some.

Unless a person can pay off their monthly balance without fail, they're shocked when they open their monthly bills and see an astronomical fee attached to their purchases. It's generally advisable to only open a credit card account if you can pay it off monthly.

2. Buying a New Car

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Most Americans can't afford a new car, but unsurprisingly, that doesn't stop millions of people from taking on new auto loans in 2024. Most tricky dealers will intentionally stretch out the length of your loan, with seven or eight-year loans more common today than ever before.

Of course, with a longer loan comes more interest you'll be forced to pay. Consumers often pay nearly 25% of the car's value in interest payments! Regardless, this sad fact doesn't deter people at all.

3. Driving an Unreliable and Uneconomical Car

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The little things add up in life, and driving an unreliable and uneconomical car or truck can make a poor person's life even more challenging! While many people pride themselves on driving an older car, constant car repairs can sometimes put a severe dent in their wallets. In addition, older cars (and most trucks) get gas mileage in the teens at best, making all those extra stops at the gas station a hapless exercise in throwing your money away.

4. Not Having Roommates

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In today's tumultuous housing market, it's shocking how many people grit their teeth, bite the bullet, and live alone, even if having a roommate or two makes more financial sense. I get it; regardless of age, nobody prefers having a roommate.

But many experts believe people need to push their pride aside and accept reality: Having roommates can decrease your rental costs exponentially and can be the differentiating factor between staying poor and being financially successful!

5. Not Keeping an Eye on Your Credit Score

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One of the most essential parts of being financially successful is always focusing on improving your credit score. Little missteps add up in a significant way in the eyes of creditors. Failing to pay your bills on time, missing payments, and taking on too much credit than you can handle can quickly put massive dents into your score.

An excellent credit score is a precursor to opening doors to future home ownership, car loans, and other life milestones.

6. Upgrading Your Smartphone Annually

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If you consider yourself poor and upgrade your iPhone so you can be seen with the new model every year, you only have yourself to blame for your financial shortcomings. Let's be honest: the iPhone hasn't significantly changed in over five years. Nobody cares about the model of smartphone you're staring at all day but you.

If you sit down and crunch the numbers, you'll realize how much your iPhone upgrade addiction costs you money in the long run!

7. Impulse Buys

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Unfortunately, poor people often have one thing in common: They're undisciplined. Being undisciplined financially means they succumb to more impulse purchasing than any other group, leading to massive drains in their bank accounts.

Thankfully, there are many ways to combat impulse shopping: Delete shopping apps from your smartphone, never shop for groceries while hungry, and delete payment information from your computer so all purchases must be made manually.

8. Too Many Monthly Subscriptions

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In 2024, the world is overrun by endless monthly subscriptions. From streaming services like Hulu and Netflix to food subscription boxes like Blue Apron (and everything in between), most don't realize how many things they're signed up for in a given moment!

You can ease the financial burden by taking stock of your subscriptions and canceling as much as possible.

9. Not Living Within Your Means

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I know it's difficult sometimes, but living within your means is paramount to keeping anyone above the poverty line. Simply put, you should never spend more money than you make. This straightforward budget should eliminate any debt problems you may encounter in the future, but it's easier said than done.

Living within your means will be exceedingly difficult in 2024 when every move you make will be judged by your peers' thanks to social media and an always-online world.

10. Co-signing Loans

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I'm shocked how many people who consider themselves poor agree to co-sign a loan! While it's admirable to help out a friend or family member in need, you will ultimately be on the hook for the loan if the other person decides to stop making payments one day.

Yes, it's true: You could incur a debt that you didn't even receive money for in the first place! Co-signing loans is something only the wealthy should be allowed to do.

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