How to Stay Away from Debt
Now more so than ever, should people shy away from debt
. The economy is tough and borrowing money is not as easy as it has been in the past. Those with sightly credit history are the only ones that can be favoured with
personal loans.
For others, the best they can do is to preserve their incomes. They should keep it from going to debt payments. But how exactly does one avoid getting in debt? There are countless ways. However, no matter how easy or hard the steps, utmost self-discipline is always required.
Control Spending
Spending more than what is earned is the fastest way to succumb to debt. Buying a colossal yet unnecessary home, choosing a sleek car over a sensible one, and shopping without restraint are examples of deeds that quickly lead to financial ruin. What these people don't realise is the aftermath of the initial purchases. They fail to analyze mortgage payments, interest rates and so on. The best thing to do is to live modestly. This goes for both the big-time and average income earners.
Pay off Debt
To completely escape debt, any existing debt must be paid in full. The key is to pay on time, by paying more than the minimum and keeping at it until the balance is zero. This is hard to do especially at times when money is tough. But discipline, wise spending, and the will to get rid of debt can help achieve this goal. Avoiding accruing anymore debt, such as
personal loan and credit card debt, will definitely speed up the process. It means that people should start cutting up their plastics and pay in cash.
Make a Budget
Directionless spending is perilous. People can easily lose track of their spending, get swayed by offers and infomercials easily, and spend more than what they ought to. A budget will help avoid all these things. Through it, people will have a clear outline of what they truly need and how much they can afford to spend. It will also teach them to find better alternatives to their necessities. They might discover that a cheaper brand outweighs the popular one. Budgeting will unravel all these when followed religiously.
Save for the Rainy Days
Any cash shortage is never an excuse to not save for the future. It is always recommended, if not insisted, to have an emergency fund as a safety net should things go awry. When a person loses a job, his emergency fund will get him by at least until he finds a new job. Unexpected expenses, such as hospitalisation and travels, can be saved by an emergency fund. Every chance they get, people must set aside money for emergency funds even in small amounts.
How to Stay Away from Debt
By: Jessic Graham
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