A Loan Won’t Solve Your Money Woes If You Don’t Fix These 10 Issues First

Sometimes even the best-prepared households get knocked sideways, financially speaking. Illness, unemployment, divorce, a car accident that triggers a lawsuit – these and other situations can quickly put a hurt on the budget. In such times a personal loan or one of several types of home equity loans can provide a little breathing room until you rebuild your finances.

As noted, money woes are sometimes the result of plain old bad luck (illness, job loss). However, sometimes we’re our own worst enemies: We buy too much, we save too little, we plan not at all.

You can’t get ahead that way. And you can’t keep borrowing your way out of trouble. A loan won’t help you unless you fix the following issues.

1. Not having a budget

The simplest way to wind up in debt is to spend without thinking. Stop, then, and think for a moment about what you would like to have happen five years from now: buying a home, starting a business, getting married, traveling?

When you create a budget, you’re not just allocating your dollars – you’re enabling your dreams. An easy way to do it is the 50/30/20 budget: Spend no more than 50% of your take-home pay on essentials, 30% on wants, and 20% on saving (including retirement planning and an emergency fund). Plenty of budgeting apps exist as well (some are even free).

Read more: The Miracle Money Cure: Six Common Financial Problems a Budget Can Fix

2. Not tracking spending

You can’t plug budget leaks unless you know where they are. Track your spending for a month, using pen and paper or a budgeting app. The cumulative effect could be eye-opening.

For example, a relative’s ex-husband was shocked – shocked! – to realize that spending $8 a day on fast food added up to $240 a month. His wife had made more money than he did, and their commingled finances made it easy for him to swipe a card and think no more of it.

Here’s hoping that your own habits aren’t quite that clueless. But even those of us who think we’re doing pretty well could be surprised by the cumulative impact of certain habits: beef jerky and a soda every time we pay for gasoline, daily iTunes downloads, $20 a week on scratch tickets.

Add up the opportunity cost of those non-essentials, and ask yourself if you could do better. (Spoiler alert: You probably can.)

Read more: Why Keeping Careful Track of Your Spending Behavior Is So Valuable

3. Keeping up with the Joneses

Just because next-door neighbor bought the priciest riding mower on the market doesn’t mean you have to ditch your trusty Snapper. When your coworker talks about all the activities her kid participates in, you don’t have to sign your own tots up for horseback riding and soccer camp.

You should not let other people determine your clothing, décor, automobile, or anything else. It’s no one’s business that you bought a fixer-upper, that you drive your car until the wheels fall off, that your idea of nightlife is to read a new library book once the kids are in bed.

Remember: The Joneses may be up to their hairlines in debt. They might be focused on keeping up, too – with the minimum payments, that is.

4. Wanting your kids to have things you didn’t

There’s nothing wrong with this! Except when there is.

Obviously you want your children to be well-fed, reasonably well-dressed, and housed comfortably. You might also want to give them treats and opportunities you never had, such as vacation trips, a big allowance, loads of extracurricular activities, and fully funded education plans.

But don’t let this noble impulse bust your budget. Just because your kid wants snowboarding lessons, a new smartphone every year, and a car of their own at age 16 doesn’t mean you have to give these things. Staying out of debt and funding your retirement should take precedence over granting every whim.

At the very least they should have some skin in the game: doing additional chores to help save up for a big-ticket item, say, or mowing lawns or babysitting for extra pocket money.

Besides, we aren’t doing our kids any favors when we give them everything they want. Setting the bar too high now could mean setting them up for problems later on. Specifically, when they move out on their own they’ll want to keep living in the style to which we have accustomed them – and if their salaries don’t allow for that, they’ll wind up in debt.

5. Automatic upgrades

What’s wrong with your old smartphone or car or whatever? If you bought it relatively recently and it still works, what’s with the rush to replace?

If you get the newest phone as soon as it comes out, or trade in your vehicle every few years, or replace anything else before it really needs replacing, ask yourself why. Because your co-workers do? Because some commercial made you want a new car? Because you don’t know why, but you really, really want to anyway?

Think about the opportunity cost of that cash. Then think about the way you want to live, and whether or not you want other people making decisions about your money.

Read more: Why You Should Worship Your Paid-Off Car

6. Shopping mindlessly

If you don’t need anything, stay out of the mall. Going shopping with friends puts you in a position to find something you suddenly can’t live without, or something that looks so cute on you or would be so cool in your house or so useful in the garage.

Except that you were doing just fine without that item until you saw it.

Ditto online shopping: Don’t cruise your favorite retailers’ websites unless you have a specific reason to do so. Better yet, undo the “one-click” function and remove stored credit card info from all sites where you’ve shopped in the past.

Bonus frugal points if you change your online passwords to something that has personal significance, such as “WeDDingDAy8192020,” or “19YEarsLEftonMORTgage,” or “EARLYretire2028” – these little reminders of where your dollars could be going instead might help you from overbuying.

Read more: 11 Strategies to Minimize Shopping or Avoid It Altogether

7. Always buying retail

Why automatically pay full price? Instead of heading straight to the shopping center when you need (or want) something, consider these options instead:

Thrift shops: Some are junky, but others are great. It’s like a treasure hunt. (Pro tip: Find out if there are senior discounts or other special deals. For example, a secondhand store my daughter likes offers 50 percent off every Monday.)
Consignment stores: Like thrift shops, except they’re more discriminating about what’s accepted.
Flash sales: While online shopping should be approached with caution, sometimes a sale really is too good to pass up. Hold yourself to limits, though: Just because those slacks are a great deal doesn’t mean you need to buy a pair in every color.
OfferUp, LetGo, Craigslist: Sometimes people want (or need) to get rid of furniture, tools, bikes or automobiles without the hassle of a yard sale. Caution is required, but you can get some darned good deals this way.
Newspaper classified ads: Yes, really. A guy I know recently bought a pickup truck (necessary for his job) from a newspaper ad, spending many thousands less than he would have paid at a dealership.
Freecyle: You might be surprised at what’s being given away, no strings attached. I’ve seen beautiful furniture, clothing, bicycles, toys, books, and other useful stuff offered up.
Yard sales: Another treasure hunt. I’ve seen items still in the shrink-wrap at these sales. It’s a great place to buy baby stuff, including newborn-sized clothing that seems never to have been worn.
Buy Nothing Facebook groups: Last month my partner and I just picked up an almost-new Weber grill. Some of the other things I’ve seen lately: baby stuff, solid wood table, sewing machine, board games, computer desk, cookware, and tons of children’s clothes. All of it is free.

8. Overdoing it on special occasions

Are holidays and birthdays completely over the top? Maybe it’s time to tone it down. When they become extravaganzas of gift-giving, we cheapen the meaning and also set the bar higher and higher. A kid who gets tons of presents is unlikely to appreciate each one fully – and more to the point, he develops a sense of entitlement.

As for birthday parties, when did they start resembling mini-coronations? Even one-year-olds are having party rooms reserved, decorations put up, and gift registries established. Really?

Think of all the money that’s spent and quickly forgotten. Now think what those dollars could have done for a child’s education fund – or your own retirement.

Celebrate joyously, but celebrate sensibly.

Read more: Celebrating Life Events Frugally and Meaningfully

9. Overbuying for grandchildren

While waiting in line at a crafts store, I met a woman who developed the bad habit of having small gifts waiting for her granddaughters whenever they visited – and they visited a lot. The woman was fretting visibly as she looked over the items in the store’s dollar section.

“What do you buy for someone who already has everything?” she asked me.

After hearing her story, I felt very sad not just for her but also for the kids. A visit to grandma’s house had become an exercise in acquisition. The first thing they do upon crossing the threshold is to ask what they’re getting. (Does anyone else find that quite sad?)

Expectations are made, not born. If you’ve gotten into the habit of treats and more treats, scale back. Replace them with activities and gifts of time. The kids who are used to getting stuff will gradually become used to not getting stuff – and when occasionally you do treat them, it will mean a lot more.

Again, the money you save could go toward their education funds or toward shoring up your own budget. You can’t finance retirement.

10. Giving more than you can afford

Charity is a noble impulse. But giving to the American Red Cross or the Society for the Prevention of Cruelty to Animals should be done after you’ve taken care of business. Specifically, after you’ve built an emergency fund, started saving for retirement, and taken care of any consumer debt.

Put on your own oxygen mask first, financially speaking.

Award-winning journalist and veteran personal finance writer Donna Freedman is the author of “Your Playbook for Tough Times: Living Large on Small Change, for the Short Term or the Long Haul” and “Your Playbook for Tough Times, Vol. 2: Needs AND Wants Edition.”