Avoiding Debt
It would almost seem a no brainer to tell you that the best way to avoid debt is to live below your means. Most people today, however, live by the buy now, pay later method of financial planning, and for most of us, this leads to financial disaster. Consider your spending carefully by following a few simple tips to help avoid putting yourself and your family into debt.
Credit cards are naturally the first thing you are going to need to tame in order to avoid going into debt. The temptation is everywhere. You probably don’t go a week without getting a pre-approved credit card application in the mail, and each one offers a bigger and better bonus if you use their card. You may get cash back, frequent flyer miles, gift certificates to use at your favorite restaurant or department store. Once you begin using a card and paying back the interest on the money you spend, you quickly lose all of those benefits. If you are unable to pay the balance off at the end of each month, the amount you will pay in interest eats away at the cash back bonuses and the gift certificate rebates. Only use your credit card to purchase items that you already have the cash to pay for. I know it sounds like a ridiculous way to use a credit card, but in order for the money to stay in your pocket, it has to be there in the first place.
Steer clear of impulse buying. The day before the Super Bowl, the plasma television looks great, and you know your friends will have a much better time at your Super Bowl party if they can count the blades of grass on the field. But the day after the game, when your team has lost, there is salsa spilled on your sofa cushions, and a buffalo wing bone is stuck in your garbage disposal, you are stuck with the bill for the television, not to mention one for the plumber and the upholstery cleaner. Save for major purchases like big screen televisions or major appliances so that you are not relying on a lender to foot the bill.
The big word in avoiding debt is BUDGET. Get your fingers out of your ears and stop going, “La la la, I can’t hear you.” Writing everything down is the first step to getting a budget together. Make sure to include your daily stop for coffee and your weekly trip to the nail salon. Once you have everything written down, you can begin to find the places where you can eliminate things. If you want to make the big screen television purchase, figure out how many lattes you might have to give up, and factor in the savings for doing your own nails. This might be a good time to call in your utilities companies. Many gas and electric companies offer free visits to show you where and how you can save money on your utility bills, and the phone and cable companies may offer you a new plan for less money if you call them.
Once you are aware of and in control of your spending habits, you will find it much easier to avoid getting into debt. Have a plan for major purchases; keep an eye on your savings, and the end result is a stress free, debt free plan for living.