Staying debt-free life is not impossible. It just needs little planning and management skills. There is a delusion that only the rich can evade a debt. However, in practicality, anyone can lead a debt-free life. Check out how to get out of debt and stay debt free.
It is always important to keep away from debt as it can pose a threat to the finances and the burden it imposes over a period. Furthermore, the person would be spending most of his money towards the interest.
Many people succumb to debt due to excessive purchases of the things they may not need in life. If an individual has a clear conscience, he or she can think twice or even thrice before buying the product. It not only helps in avoiding unwanted expenses but also assists in saving a handful of money.
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How to get out of debt
If you are looking for some easy quick fix way, then let me say THERE IS NONE. The practical tips related to the financial management can help any individual keep away from debt but it takes some will power and discipline.
It is further imperative to understand the importance of things in life and their necessity. A simple act can change the financial management and help in lead a trouble free life. The planning of the finances is a two-stage process.
The first stage concentrates on spending and saving policies. It will dictate the handling of the funds. After possessing the saving policies, staying with them and learning how to save money is essential. Although many people have the urge to spend money on different things, taking time to understand its necessity can prove to be an important element and the first step towards fighting the urge to spend. Such an action gives an insight into the spending policies and the opportunity to lead a debt free life.
The second stage is to turn the saving plans into a habit. Of course, it might be difficult at the beginning; however, a little try and dedication can help in creating a second nature of savings. They become part of everyday life and prove to be a success in the decision-making process at both home and office.
The process of learning personal finance management begins with the following core principles’. It will be arduous at the start but with constant practice and changing the mindset, achieving success is possible. Furthermore, these principles offer protection against debt and accumulate an enough amount of the savings.
The budget or the monthly finance is the balance sheet of an individual. It includes both the personal and household expenditure. To begin the process, recording the details is essential. It includes both credit and debit.
Collecting receipts can also be helpful. If most of the purchases are through online, using debit/credit cards, just retrieving the monthly statement will serve the purpose. Recording the purchases gives the possibility to monitor the monthly activities.
It will provide a comprehensive report on the spending pattern. Categorizing the spending into areas such as food, groceries, entertainment, gasoline, taxes, etc. further helps in looking in-depth at the unwanted expenditure.
Preparation/filing of the monthly bills gives the chance to compare the cost with previous months. It also provides an opportunity to compare if it is in line with your monthly salary.
Additionally, including the savings in the checklist will be helpful. Do not entirely stop the money for entertainment. Keeping a track of it will be useful in reducing the frequency of visits and thereby, the savings.
Monitoring the monthly expenses is a good habit. It gives the detailed report of the expenditure and the total savings. However, at times, it becomes difficult to live with just one income.
Cutting down on expenses to some limit is feasible. Nonetheless, an overly limited spending cramps the daily life. The solution is to look for different ways to earn additional money. For example, if an individual has time to work, he or she can seek a part-time job.
The extra income will be useful in paying the utility bills and manage a little household expense. The hardest part is thinking practically and understanding the situation.
To overcome these hurdles, one will have to make hard decisions. If a person can spend more money, then maybe it is feasible for that individual to make additional money within no time. All it needs is a transformation in the mindset.
Not every person has financial problems. It does not mean that they should not look for other sources of income. Money is important, and one does not know the future. There are chances that an emergency arises suddenly.
At such times, the savings will help overcome the situation and prevent any need for seeking financial help. Adding money is always good and reaps benefits when necessary.
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3) Use of credit cards
Credit cards attract a high-interest rate. Furthermore, the transaction charges vary according to the type of the operation carried out. Although credit cards offer excellent benefits, using it often can slowly deepen the crisis.
There are different variants of credit cards. It is essential that the applicant choose the requirement according to the spending and income level. Furthermore, considering the charges and interest rates helps in choosing the best.
Most of the cards now offer rewards, travel miles, and cash points. Using the card practically helps in utilizing the accumulated points or miles. For example, purchase of groceries rewards in cash points. When the cash points reach a minimum value, users can use them to pay the grocery bill in the future.
It will save the money kept aside for the purchase of groceries for a particular month. It is always good to think in a practical way before using a credit card. Keeping the cash in hand and using a credit card always pays off. One can pay the money back in 30 days for using the card and still enjoy benefits.
As most cards give 30 days as the payback time, repaying within the period does not attract any interest. Learning how to use the credit cards and benefit from each transaction is the trick. It will prevent from unnecessary debt towards the interest payment and receive rewards.
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4) Increasing saving and reducing spending
Spending thoughtlessly can result in high debt. Most people often shop and spend money recklessly on things, which they do not need. Rather than spending on things that have no importance, investing in saving policies or hybrid bonds can reap benefits when needed.
For example, buying a new pair of dress every month is ridiculous. It not alone clogs the wardrobe but also increases waste. Thinking wisely and buying clothes is a good option. The same analysis applies to everything.
A simple calculation and research will help any individual to purchase needed things at an affordable price. Thinking twice or thrice before buying any product can prove to be useful.
5) Do it yourself
Many articles/things in the market can also be prepared at home. The do-it-yourself activity is fun and intriguing. It is also a perfect way to release stress and relax after a long day at work.
The best of the DIY activities is it also save money. For example, changing the vehicle oil is a simple task. By following the guides available on the internet, performing the task is possible for any individual. It not only helps in learning a new thing but also saves money.
All such little things can save a lot of money. However, one should be careful while handling the activities. Keeping the level out of danger is essential. The same is applicable when dealing with medical attention. It is preferable to consult a doctor rather than choose an over-the-counter medicine just because we said DO IT YOURSELF.
On a final note..
Saving money is an important aspect of today’s life. Keeping away from debt is possible for any person who holds an active command over their finances. Financial management is a crucial issue and prevents excessive spending.
It is similar to the corporate organizations that often issue layoff notices to employees as part of cost cutting. By reducing unwanted purchases, keeping a steady and healthy monetary activity is possible. The aforementioned tips are useful for any person irrespective of employment, salary, gender and location. Addition of these elements ensures that a person utilizes the possible resources to the peak and reduces expenditure.
A small change in the day-to-day activities and the determination to save money will have a significant effect on keeping away from debt and lead a happy life. Hope this tips will help you get you out of debt and stay debt free
What is your opinion of debt? Has it affected or improved your financial position?. Share your experience for the benefit of others.