Posted by Mike Smith :: May 19, 2008 @ 9:15 am

Bad habits are often difficult to overcome. Many times, the problem seems so overwhelming that we don’t know where to start. The complexity prevents us from taking any action. Breaking down a bad habit may allow us to ultimately break free from it.

Consider the example of someone living beyond his or her means and accruing high interest credit card debt as a result. A peer-to-peer loan could help you to consolidate the debt, but without eliminating the habits that caused it, new debt could emerge. There are many potential root causes of the problem in this example, such as lack of a budget, indifference towards the situation, desire for elevated social status, or confusing wants and needs. With so many potential causes, it may be difficult to find the actual culprit and take corrective action. As an alternative solution, you could attack the problem from another direction.

The actual spending that leads to your debt probably falls into a number of categories. If you could isolate just one of these and focus on reducing it, you might be able to begin to slowly progress towards your ultimate goal of living within your means. Let’s say that you notice that you often buy a few snacks from the convenience store when you are there to buy gas. Eliminating that one bad habit is probably much easier than trying to eliminate all discretionary spending. Or, you might find that you eat out when you have friends in town, on days you go to the gym, and when there’s a big game on TV. Not eating out for the big games is much more manageable than trying to never eat out.

As you eliminate pieces of your bad financial habits, the severity of the overall habit also goes down. With each additional piece you cut out, you get closer to being able to finally handle quitting the habit all together. This method works with many types of bad habits, but due to the multiple reasons for similar behavior, it works particularly well with bad financial habits. Even if you’ve failed in other attempts to