Let’s face the truth: being in debt sucks! However, debts have become an integral part of our day to day lives, such that we always find ourselves in debt. Sometimes we’re even forced to borrow more money to repay our older debts. So everyone wants to know how they can get out of debt. If you ask me, I’d say it’s better to know how to avoid debt. through money lender Singapore. If you never get into debt you will never have to worry about how to get out of debt.Here are so many different things that contribute to our ever-increasing levels of debt. The following advice goes some way to explaining that way to stop increasing your debts beyond control or avoid getting into debt in the first place.
So what causes debt?
We get into debt when we spend more than we have at any particular moment in time. This forces us to borrow money to meet the excess of what we can afford. If you make it a habit to always fulfill your wants even when they are above your means, then you’re bound to be heavily indebted sooner than you can imagine.
How to Avoid New Baby Debt
The first and most important thing to do to avoid debt is to acknowledge the role of personal finance towards a successful life. Sadly, most schools don’t teach students how to manage their finances, despite the fact that credit card companies are quick to dish out credit cards to them as soon as they graduate. This lack of understanding of how to manage personal finances is probably the greatest factor that contributes to landing most people into debts.
You must also embrace the principle of saving. Borrowing is always easier than saving, but it’s even harder paying debts. So if you intend to enjoy your holiday at an exotic destination or you want to buy a luxurious item, save for it first in order to enjoy it fully. However, remember that it takes time to save enough money to do something meaningful so you must have a great saving discipline and lots of patience.
As difficult as it sounds, refrain from using your credit card. I think we can agree on the fact that charging something on a credit card doesn’t really feel like spending money. For this reason, we find ourselves buying more and more on credit and we ultimately find ourselves in deep credit card debt sooner than we can imagine. So my advice is: stay away from those credit cards.
Another great way to avoid debt is to prepare and stick to a budget. Simply defined, a budget is a spending plan in which you stipulate what you intend to spend on and how much you have set aside for each component. Preparation of a personal budget does not require any accounting skills. All you have to do is decide what proportion of your income you intend to spend, what you will spend it on and how much you will spend on each component. Next, stick to your budget, despite the circumstances.
Check Your Credit Report
This document has become increasingly more important with matters relative to your credit and how much you can borrow and more importantly could be charged.So the advice is to check your credit history report on a regular basis and check for any entries, which could lead you to either being refused for a loan. Plus you may even find entries in there where are due to fraudulent purchases on your credit cards etc. In the UK there are 3 credit reference companies – Callcredit, Equifax and Experian – and you can either download or have them post you a credit report for a small fee.
Pay Outstanding Bills
Whatever you do, do not avoid those letters that land on your doormat with the big Red Letters of Final Demand. Or even worse not knowing how much you have in your account and going overdrawn just because you wanted that latest dress or gadget.Make sure that you don’t get hit with late charges because you stuck your head in the sand just because you didn’t open your payment reminders or statements saying you hit your spending limit. With so many ways to check your accounts or credit cards, there is no excuse for over-spending or late payments. Even small charges can add up to get a grip on things and save more money each month.
Don’t use credit.
This one is simple. If you don’t use credit than you can’t get in over your head when it comes to debt. Using cash, or saving for an item, rather than using a credit card to purchase the item on a whim can help you to avoid credit card debt and help you to retain a financially secure future.Start an emergency fund.
When it comes down to it, most people use credit cards and loans in the time of urgency and therefore beginning an emergency fund that you can rely on as an alternative to the cards and other types of debt is an effective way to ensure that you are able to avoid debt.Don’t carry a balance. In the case that you use the credit card to accumulate points or repay the card after it has been used, it is important to avoid carrying a balance on the card. Avoiding carrying a balance on the credit card can be an effective way to retain control of the finances and keep your debt in check.
Take advantage of automatic savings accounts that can help you to establish a savings account or even establish an emergency fund. Through these accounts, you can choose a certain amount which is debited from the account every single month, or you can choose to have a small amount debited from the account each time that you make a purchase, which can be deposited into the savings account. Saving has never been easier!Since saving is becoming simple, it can be easy to create a savings account or an emergency fund using money lender Singapore through these methods, you can easily avoid debt and ensure that you can maintain the control of the personal finances.
Conclusion
Avoiding debt because of poor money management is one of the biggest factors to increased personal debt. By taking into account the 5 tips above you should be armed with the knowledge to help avoid some if not all of the key factors, which leads to debt.