Avoid Debt With These Expert Personal Finance Tips
Debt is a dark cloud that lingers above millions of people. It’s never fun when you’re in debt, and the best solution is to avoid it in the first place.
Here are three expert tips that are designed to help you stay clear of financial debt:
Create a Budget and Stick to It
Creating a budget you can actually follow might be harder than you might think, in order to get a good budget, you need to think about a couple of things:
- Calculate your income – First of all you need your income to get started and estimate how much money you can spend.
- Budget spreadsheet – Use a simple to follow spreadsheet, the simpler the better, I recommend using this one published here on CC Bank’s tutorial for creating a budget.
- Don’t forget to save – The main point of using a budget is to help you save money, use it wisely and set a minimum amount in your budget that will go every month towards saving.
Set Up Direct Debits
If you ever have to make regular payments, then you need to set up a direct debit. This is a handy way of keeping up to date with all your important bills. Instead of having to worry about payment dates, the money is taken out of your account automatically.
How does this keep you out of debt? Well, it means that you’ll stay on top of your regular payments. So, you shouldn’t miss any, leading to excess charges. Excess charges can soon add up and cause you to fall into debt. Plus, missing payments gives you a low credit score, so, direct debits can help you with that too.
Downsize To A Smaller Home
Buying a big house may seem like a good decision, but it can often lead to years of debt. Generally speaking, the bigger the home, the more expensive it costs. The initial price will be high, which requires a hefty home loan. So, you end up having to keep up with massive repayments every month, and it can be a huge burden. Similarly, bigger homes will use up more energy from electricity and heating. As such, your utility bills will be very high too.
Have no fear; there’s an easy way around this. Sell your home and downsize to a much smaller property. Now, I know what you’re thinking; this could take ages, how can I sell my house fast? There are ways for you to get a quick sale, it all depends on the current market. Either way, the sooner you sell, the sooner you can avoid debt and life a more comfortable life.
Approach Credit Cards With Caution
For many people, credit cards are a way of life. It’s normal to apply for a credit card and use it to pay for things. In fact, you can save money on some big purchases by doing it this way. There are lots of benefits to using a credit card that lures people in. The problem is, they also happen to be a top cause of debt. Loads of people up and down the country will fall into credit card debt, and end up in lots of financial trouble.
However, there’s an easy way to ensure this doesn’t happen to you. What you need to do is approach credit cards with caution. Don’t apply for the maximum amount of credit as possible. If you do this, you may be unable to keep up with your monthly credit card bills. Apply for less than you’re entitled to, and you’ll cope a lot easier. Also, only apply for a card if you have a steady, regular income. You need to earn money each month to pay the statements.
With these expert tips, financial debt can be avoided. Don’t make silly financial decisions, or they’ll end up coming back to haunt you in the future!