Debt is a word full of negative connotations and is certainly a situation that many people hope to evade. A recent study even reported that three out of four people in debt say it impacts on their mental health, not just their finances. Help and advice on how to eliminate existing debt is abundant but prevention is always better than a cure and so knowing how best to avoid getting into debt in the first place can make for a much less stressful financial life and set you up for a prosperous future.
Be honest with loved ones
Many people spiral into debt because they are too embarrassed to consult their loved ones when things begin to overwhelm them. Opening up and being honest is the first and most important step, as you then no longer need to face financial difficulties alone, armed with the help and understanding of your friends and family.
The same principle applies when you are in a committed relationship. Both parties involved should be made well aware of the others’ financial situation before entering into marriage, as a wedding acts as a legally binding contract that can make you liable for your partner’s debts should they be unable to pay them.
Make a budget
Monitoring your spending habits and keeping track or your receipts over an extended period of time is the best way to highlight where your money is really going and help you make informed decisions regarding your money. This makes planning for the weeks and months ahead a much less daunting task by allowing you to make cuts where you deem them necessary and possible, through setting yourself realistic targets.
Save up
When you want to make an expensive purchase such as a television or a car, not being able to afford it in one lump sum does not mean you have to agree to monthly payments or borrow money from a bank. Shopping around for the best deal and then saving up until you can afford it in one payment means you may have to wait a few extra weeks or months until you can get hold of the item but that once you do, it is fully your own and you are not indebted to anyone.
Avoid extras
From internet providers to airlines and from banks to phone companies; the list of organisations that try and add extra charges onto their services is ever expanding. While in many cases – such as with the widely publicised PPI – fees and hidden costs can be reclaimed if identified afterwards, it is always best to avoid needing to do so by diligently reading the small print of any contracts and declining any ‘perks’ a business offers you over and above the standard product or service you are trying to purchase.
Avoid unique purchases
Expensive, extravagant purchases such as cars and houses tend to be the ones that we will eventually sell on to someone else. This means that spending money to remodel your home to fit a very particular taste or purchasing a vehicle that is painted in a very lurid colour or kitted out with bizarre extras is not only a drain on resources at the time but will also make them less desirable to the mass market and therefore more difficult to find a buyer for further down the line. Neutral colours and styles are always the easiest to sell.
Do it yourself
Obviously there are certain important and potentially dangerous jobs that require professionals but the more basic tasks you are able to perform by yourself, the less money you have to fork out to fund outside workers. Be it changing the oil in your car or decorating your house, you can pick up valuable life skills and save yourself a lot of money in the process, helping you become (financially) independent.
Why You need to be Grateful to Direct Debits?
Against the backdrop of statistics which show that more than one-half of the bill payers in the UK show a clear preference for the automated payment mechanism of Direct Debits, it is quite evident that there are advantages galore of setting up a Direct Debit — also referred to as a pre-authorized debit or a pre-authorized payment.
Since Direct Debit payment collection method enables you to authorize your bank to allow the withdrawal of a pre-ascertained payment amount from your bank account, either by an individual or an organization, the mechanism is ideal for paying your regular bills, and making payments – such as membership subscriptions and the like – which remain unchanged over a specific period of time. In fact, most of the users of this payment mechanism are grateful to Direct Debits UK for the following benefits which they bring along:
Direct Debits are ‘no hassles’ financial transactions: With the Direct Debit method chiefly authorizing your bank to allow the monthly, quarterly or yearly deduction of a pre-determined amount from your account, you can rest assured that there are absolutely no hassles involved in having your bills paid well in time. Thanks to the safe and convenient transactions underlying Direct Debits UK, you no longer have to remember the dates for the payment of your regular bills and membership subscriptions. At the date and month specified by you, the amount you need to pay to an individual or organization is automatically transferred from your bank account to that of the payee. As such, not only do Direct Debits save you the time which would have otherwise gone into writing checks and posting them, but also ensure timely payments without any needless hassles.
Direct Debits are ‘guaranteed’ payments: The Direct Debits UK mechanism underscores a safe and reassuring way of making payments which are guaranteed, so that you get automatically protected by some significant safeguards. Your protection in the automated Direct Debit process may either be in the form of instant ‘money back guarantee’ from your bank in case there is some kind of error in payments, or a beforehand notice informing you of any change in date of payment or amount, or even the right to discontinue the Direct Debit authorization at any time, with no questions asked.
Direct Debits can be ‘money-savers’: The simple, safe and useful Direct Debits UK payment method is a great payment option to clear your regular bills as it saves you a lot of time and also some unnecessary expenditure linked to other bill-payment alternatives. The ‘money-saver’ aspect of Direct Debits is evident from the fact that payment of regular bills via this mechanism gives you the advantage of spreading your costs over a period which you have worked out with the payees.
The savings inherent in the Direct Debits UK payment method pertain to the elimination of additional payment handling fee, which presently is £5 per month. Moreover, in addition to this small saving, you can also avail some discounts – which can add up to a handsome amount each year – that organizations generally offer for automated payments, which are convenient and efficient from their perspective too!