It is said that prevention is the best medicine. This is true especially in economics and to be more specific debt, in that the best way to avoid falling into debt is by not letting the debts accrue in the first place.
The reason we mostly fall into debt is because we mostly need to borrow money in order to be able to finance certain necessities such as our mortgage, car payments and education among others. It is often close to impossible to pay for such necessities in cash.
We take a look at 7 easy tips on how to avoid falling into debt.
1 Try as much as possible to pay in cash: Paying in cash ensures that you spend within your budget. After all you can’t spend cash that you do not have. Therefore to avoid living beyond your means, try as much as possible to limit yourself to cash transactions.
2 Avoid impulse buying: Part of the reason most people accumulate credit card debts is because they spend money on unnecessary things mostly in the spur of the moment. It is important to nurture adherence to budgets so as to avoid impulse expenses.
3 Avoid sales traps that encourage debt: There is a tendency by most people to fall into sales traps that result into debt such as “buy now, pay later” retail offers. Such purchases end up accumulating thereby increasing your debt.
4 Do not borrow to spend: Never at any time develop a habit of borrowing money to spend on essential products. These are the kinds of products you will need regularly therefore you should use your income and not borrowed money. Borrowing to finance staple purchases is most definitely a journey into debt.
5 Go for the best offer: As we have established, sometimes you have to borrow in order to finance certain purchases. Therefore, if you must borrow, ensure that you find the lender who offers you the lowest interest rate as well as accompanying fees.
6 Monitor your credit card: Credit cards are arguably the most common source of debt currently. It is therefore important for you to closely monitor your credit card payments and keep tabs on all your purchases so that you do not spend beyond what you can afford to pay back.
7 Settle your credit card bills: There is a tendency by many people to just make the minimum payments on their credit card yet their expenditure is much higher than the minimum. This will ultimately lead to accrued bills which will lead to debt. Make it a habit to settle your entire credit card bill so that as you spend, you are doing it on a clean slate.
There you go. Do this and you will thank us later.