How to avoid Debt
We talk alot on this blog about how to get yourself out of debt, but we should also consider how to avoid debt in the first instance. With so many financial pressures in todays society, we should always be aware of the well known idiom:
“Prevention is better than cure”
With that in mind, it is always advisable to think before you act, because once you are in debt, it can be a vicious spiral of more and more borrowing.
If you are close to the being in the red, consider a few of these simple steps:
Spend within your means - Never intentionally spend outside your budget. The ‘buy now and think later’ attitude is a surefire way to get yourself into debt. Understand your earnings, take away your monthly expenditure and that is your expendable income.
Keep detailed financial records - Set up a simple excel spreadsheet to calculate your spending. Every time you make a purchase, add this to your spreadsheet and this will allow you to understand where your money is going. Don’t miss anything out, even small purchases add up to a considerable amount over a month.
Avoid using credit cards at every opportunity - By adding to your credit card budget when you can spend via other means, you are increasing the likelihood of overspending or forgetting about this outstanding balance. Relying on varying forms of credit for purchases can lead to a dependency on credit cards for purchases, when in reality, you can’t afford the item in the first place.
Think about your savings - There are various ways to increase your assets, through popular saving methods such as ISA’s, savings accounts, bonds and stocks. If you are able to set money aside on a monthly basis, no matter how small, this can create a ‘nest egg’ for any tough financial spells later in your life.
If you are in debt already, you can take something from these tips. Being able to budget effectively is one of the most important aspects of keeping a healthy bank balance.
Comments
One Comment on How to avoid Debt
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Roger Mayne on
Wed, 1st Jul 2009 8:37 am
It’s a sad fact in these times of economic crisis that many people will use credit cards as en extension of their wealth, rather than as a way of getting credit to pay later.
That’s why so many people are in debt and find it hard to get out of it. It’s all about changing habits and mind set for most people (depending on how much debt there is of course).
Your blog has been bookmarked. Thanks.
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