Buying things because they're on sale

It's great to buy things on sale, but buying something becauseit's on sale is another story. Stores use sales to drive you to spend money on things you wouldn't buy otherwise. These are generally impulse buys, things you don't need or even want very much.

Before you purchase an "on sale" item, evaluate whether or not you want it enough to spend full price on it. If you would have bought it regardless of the sale, chances are you really do want it. This doesn't mean you should necessarily buy it, but taking a moment to think before you buy can prevent you from purchasing things just because they're on sale.

Keeping your spending out of sight

Are you wondering where all your money is going? Well, there's an easy way to find out. Review your bills at least once a month and keep a written log of any cash spending you do.

By looking over your spending periodically, you will be accountable for your spending. This means you might notice some bad spending habits. Maybe you'll notice that the $2 you spend on your daily soda adds up a lot over the month or that too often you're turning in your movie rentals too late.

You also might discover your cable company is charging an extra $20 every month or your gas bill is getting pretty steep. You may even realize you're being charged every month since you started that "free trial" offer. Reviewing your spending ensures you're not blindly handing out money.

Paying your credit card bill late

If you pay your credit card bill late, the company will penalize you with a higher interest rate. This will make paying back your debt more and more challenging.

In fact, paying your credit card bill late can penalize you for years to come because it will impact your credit score causing you to have higher interest rates, limiting what you can buy in the future and even increasing your insurance costs.

Buying things with money you don't have

Credit cards and loans may seem like an easy solution to financial woes. But spending money you don't have for things you don't need will only get you in severe trouble.

For example, payday loans can have interest rates up to 1000%. This means you'll be owing these "money store" companies for a long time.

A better option is to only spend what is absolutely necessary and to take on small jobs or sell belongings to make up the difference when necessary.

While there are occasions when going into debt is appropriate such as to fund a college education or to buy a house, these decisions should be made with great consideration. Make sure you have a detailed plan to pay off these loans with a deadline. Also, don't disregard alternatives. For example, you might ask yourself: is it worth it to go to a school with really high tuition or is there another school that doesn't charge such steep amounts?

Using credit cards for the points

While you can get some great deals using rewards, you can also spend more money than you otherwise would. A study showed that people who use these programs tend to spend an extra $115 a month, which can be almost $1400 a year.

Be careful about how you are using these rewards programs.

Expecting a miracle

Buying lottery tickets, playing the slot machines or waiting for Ed McMahon to show up on your doorstep are not solid financial plans.

First of all, these habits can gnaw away at the money you do have. While that slot machine may only accept quarters, it can eat enough quarters to feed a year's worth of laundry machines in no time.

Second, even if fate is on your side after going broke and your long-lost great aunt named you her heir, you'll likely go broke yet again if you do not have secure financial habits and the inheritance is your only source of income.

Rather than wait for the stars to align and grant you a financial miracle, take control of your money by developing good spending habits right now.

Paying the minimum on your credit card

The way you pay your credit card bills makes a difference. It can even make your debt worse. If you continue to use your credit card and you pay only the minimum, your balance will continue to grow and you won't make any headway on becoming debt free.

Embracing lifestyle inflation

If John earns $50,000 a year but only spends $35,000 and Joe earns $175,000 a year but spends $200,000, who is better off financially?

Of course you can make some lifestyle changes as you get a raise or a better job, but it's only appropriate if you continue to live within your means.

Getting into this type of trouble can be a result of trying to keep up with the Joneses. Realize now there will always be someone with fancier stuff than you. Don't compare. Be happy with what you do have.

Paying more than you should

Sometimes we forget that we have other options than paying full price for things.

Do you check second-hand places such as Craig's List, Ebay or thrift stores before buying something new? Do you check out books, movies and music from the library instead of purchasing a book or buying $10 tickets for each family member? Do you think ahead to big purchases like vacations, so you have time to scout out good deals?

Most of the time, you can find things you would normally buy for a fraction of the price.

Not saving for a rainy day

It always seems to rain when you forget your umbrella. Don't let this happen to your financial life. Don't spend money just because you have it. Having extra money is a great opportunity to put it away in case of illness, job loss, bad economy, etc.

Above all, make sure you have a financial plan, and stick to it, so you can divert inevitable disaster.