Bad financial habits are common in America. Many of these bad habits are easy to fall into, and because they are so common, many people have little motivation to break them. There was a popular television a few years ago that pictured a man with a nice house, a nice yard and a nice car. “How do I afford all of this?” the man asked. The reply came, “I’m in debt up to my eyeballs.” While taking on massive amounts of leverage is not as popular now as it once was, it is still possible to run up big debts with bad habits. Here are some to avoid.

Living Beyond Your Means

It’s really hard to live the caviar lifestyle while bringing in beans and rice income. Unless you have another source of cash rolling your way, this is a perfect way to fall into massive amounts of debt. A big house is nice, but it will also come with more costs. Unless you’ve bought a fixer, the cost of the mortgage will likely be higher. The cost of utilities will also be higher, as there will be more rooms to heat and cool. Additionally, bigger houses usually come with higher property tax bills. Owning a Hummer or a Porsche is not a good idea for most people, either. Unless you’re bringing in well above six figures each year, you’d likely be better served with a Honda or Toyota that gets really good gas mileage.

Paying Late Payments

This is an expense that can really wind up costing quite a bit. Missing payments on cash advance loans, credit cards, car loans, and so on will incur fees and penalties. If you wait too long to pay, you can also see a negative impact on your credit score. The best way to avoid this bad habit is to set up automatic payments that take care of the minimum amount due or the entire balance by the due date each month. Late fees, like interest, affect the amount of money you have available each month to take care of other needs.

Avoid Debt

The more debt you have, the less likely you’ll be able to keep up with the payments. Too much debt can lead to more debt. Paying too much for a house can sometimes lead to higher maintenance costs. These will lead to problems when you have to take out a loan or use a credit card to pay for them. Interest on debt can compound on the negative side of the ledger the same way bond interest payments or dividends can on the positive side. Additionally, too much debt cuts down on the flexibility you have to achieve other goals like saving for retirement or going on a nice vacation.

Avoid the Sunk Cost Fallacy

Our decisions are impacted by the emotional investments we accumulate. Therefore, people who are emotionally invested in accumulating rental houses or shares of a particular company will likely think their investment will turn around if it’s been performing badly for a while. At times it’s best to just sell the property and gets as much of your original cost back without losing more money.

Avoiding bad financial habits might require creating different and better habits. For example, instead of forgetting to pay bills and having to pay late penalties, it’s a good idea to set up automatic payments that take away the possibility of having to pay a late fee. Instead of buying more unnecessary possessions each payday, it’s a good idea to set up automatic transfers into a savings or retirement account. These habits will take little thought up front, but they could improve your financial situation immensely given enough time.