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5 Habits That Keep You in Debt

Don't let these patterns take you off the path to financial freedom

Nobody wants to be mired in debt. But if we're honest about our financial patterns, we'll admit to sometimes making poor money choices — at least now and again — that can lead to debt.

An occasional slip up with your finances probably won't do any long-lasting damage. But when financial goofs become routine, you're headed for trouble.

Here are five habits that can get you, and keep you, in debt — and take you off the path to financial freedom.

Furniture storefront with EZ Credit sign

Matthew Nighswander

Avoid easy financing deals provided by furniture stores.

Buying Things "Just This Once"

Admit it: How many times have you splurged on something you knew you couldn't afford but justified the purchase by saying you'd do it "just this once"? Maybe you bought an ultra-expensive suit, took an over-the-top vacation or let a car salesman talk you into the priciest car on the lot. And all of these things were bought on credit, of course, not cash.

The problem with these one-time indulgences is that they can be costly, both in terms of the price tag and the extra interest you'll be paying over time. Even worse: these "one-time" extravagances can become habitual mistakes. Maybe you won't go out and purchase another red convertible, but the mind-set that allowed you to do it has taken root.

So the next time you want another luxury item that's financially out of reach, you simply convince yourself (yet again) that it's not that bad because it's just a one-off expenditure. It's time to stop kidding yourself. A habit is called a habit for a reason. It's because you're doing it repeatedly. Break the cycle by saying "just this once, I'm going to say no to something I can't really afford."

Purchasing a Gift for Someone — and One for Yourself

The holidays just ended and that means the credit card bills are starting to roll in. Are you one of those shoppers who went out and bought something nice for a relative or friend and then decided the gift was so nice that you'd buy one for yourself, too?

"We have all done it," says financial advisor Leslie Greenman. "You see something you like and think, 'Wow, that is so cute. I will buy one for so and so and one for me.'"

No wonder that, according to the National Retail Federation's 2011 Holiday Consumer Intentions and Actions Survey, the average American was expected to spend $130.43 on him or herself while holiday shopping.

Whether you're holiday shopping, buying a birthday gift or selecting a present for another special occasion, be careful that you don't fall into the trap of always buying something for yourself when you really just intended to get a gift for someone else. Otherwise, you could wind up with a pile of debt.

Not Opening Your Credit Card Statements

There's no faster way to dig yourself deep into debt than to turn into an ostrich and stick your head in the sand about your credit card bills. That's what you're doing when you don't open your credit card statements. But there's one big problem with this avoidance strategy: living in denial about your debt (consciously or unconsciously) isn't going to make those bills disappear.

If you fail to keep up with what you owe, your debts can more quickly mushroom, from your own spending, as well as late fees and over-the-limit charges you might rack up after going so long without even looking at your bills.

Shopping As a Hobby or Pastime

We've all heard of "retail therapy." That's when you shop to make yourself feel better. Well, another form of retail therapy might be called "recreational shopping." That's the kind of mindless shopping you do simply out of habit or because you're bored. Putting it simply, you're using shopping as a form of entertainment.

If you and your girlfriends have a standing weekly date at the mall, you'd better think twice about using shopping as your go-to activity. Even just "window shopping" can lead to whipping out your credit card if you find some "bargain" that you can't resist. All of that simply leads to more debt.

Saying "Yes" to Everyone

Many of us — especially women — have been raised to be nice and accommodating to the people around us. And of course, we all want to make our family and friends happy. But when relatives and friends ask for things that are a financial stretch for you — such as loans, investment funds or cash to start a business — that's the time to pull back and recognize your financial limits.

Saying "yes" to every economic request that comes your way is a quick way to drive yourself into debt. What's more, it could put those very same relationships you cherish at risk as well.

Lynnette Khalfani-Cox, The Money Coach®, is a personal finance expert, television and radio personality, and a regular contributor to AARP. You can follow her on Twitter and on Facebook.