Does Over-Confidence Lead to Debt?

Do you feel like you have it all together? Perhaps you are not spending money on unnecessary things, saving extra money, putting money towards retirement and seem to have it all together. But, before you admit that this may be you, you should ask whether this will put you in a difficult position.

My wife and I have been doing just this. We have no debt. We never spend more than we make each month and have a couple avenues of retirement funds accruing. Most people who have negative a net worth might idolize us. Recently, we have felt in control of our finances and it has been to our detriment. As many who have experienced the same thing, it has actually led us to splurge more frequently. If you’re not careful with being diligent, you can forget how to avoid debt.

Why Successful Financial Management Can be Dangerous

This pattern is all too frequent. It’s not just with your finances. You can do this in sports or school. Over confidence can lead to your demise. Think about it. You are playing baseball and you have successfully hit base hits for your last 10 at bats when you approach the batters box. The game is on the line and people are cheering you on. You shrug off their support as you know your recent track record. You have done this over and over. You know how to be successful. Why would you have any trouble? Yet, before you know it, you strike out and lose the game for your team. You’re left in awe and surprise at how this could happen to you.

How to Stay Financially Diligent

The same is true for finances. Living a debt free life may inflate your ego, but don’t forget that managing your finances takes time and hard work. Life is not just a matter of staying out of debt. It’s also about being wise with your money, investing it, and saving rigorously for retirement. If you think it’s a piece of cake, you are dead wrong.

The best way to stay on top of your finances and not find yourself in massive amounts of consumer debt is to stay diligent and humble. Recognize and celebrate your success, but remember what it takes to be debt free. If you do this, it will not only prevent you from buying more than you afford, but will ingrain a healthy habit in your life.

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