Debt is a scary thing. It can quickly spiral out of control, and before you know it, you’re struggling to keep your head above water. If you’re looking to avoid getting into debt in the first place, there are many strategies you can implement.
The below strategies, provided by Debt Relief Canada from A. Fisher & Associates, will help you to avoid getting into debt and if you are already in debt, help you start your debt free journey.
Here are 10 strategies to help you stay out of the red.
- Live within your means.
This means spending less than you earn and being mindful of your spending habits. If you find yourself constantly spend more money than you have, it’s time to reevaluate your budget and make some changes.
- Make a budget and stick to it.
Budgeting may not be the most exciting thing in the world, but it is crucial to avoiding debt. Know exactly how much money you have coming in and going out each month so that you can make informed decisions about your spending.
- Don’t use credit cards for everyday purchases.
Credit cards should only be used for emergencies or planned expenses that you know you can pay off in full. Otherwise, you’ll end up paying interest on your purchases, which can quickly add up and get you into debt.
- Pay off your credit card balance in full each month.
One of the best ways to stay out of debt is to pay off your credit card balance in full each month. This way, you’ll avoid paying interest and will stay debt-free. Budgeting is key to make this happen. You’ll need to track your spending and make sure you’re not spending more than you can afford. When you do use your credit card, be sure to pay off the balance in full at the end of each month. This will help you avoid debt and keep your finances healthy.
- Don’t take on more debt than you can handle.
Before taking on any new debt, make sure that you will be able to afford the monthly payments. Otherwise, you could find yourself quickly sinking into debt that you can’t escape from.
- Create a Debt Repayment Plan.
If you’re already in debt, it’s important to create a plan to pay it off. Start by listing all of your debts from smallest to largest. Then, focus on making the minimum payments on all of your debts except for the one with the smallest balance. Once that debt is paid off, you can move on to the next one on your list. This method is called the debt snowball method and it can be very effective in helping you pay off your debt and avoid further debt in the future.
- Avoid using payday loans.
Payday loans are generally a bad idea. They typically have high interest rates and fees, which can quickly get you into more debt. If you find yourself in a situation where you need cash fast, it’s better to explore other options, such as borrowing from a friend or family member, using a credit card, or taking out a personal loan from a bank or credit union.
- Build up your savings.
Having a healthy savings account can help you avoid debt in two ways. First, it gives you a buffer if you find yourself in a situation where you need to unexpected expenses. This can help you avoid using credit cards or taking out loans to cover the costs. Second, it can give you peace of mind knowing that you have money set aside for emergencies. This can help you avoid the temptation to use credit cards or take out loans when something unexpected comes up.
- Stay disciplined with your spending.
One of the best ways to avoid debt is to be disciplined with your spending. This means being mindful of your purchases and only spending money on things that you truly need. When you’re disciplined with your spending, you’re less likely to make impulse purchases that can lead to debt.
- Seek help if you’re struggling with debt.
If you’re struggling to keep up with your debts, don’t be afraid to seek help. There are many resources available to help you get out of debt and stay out of debt. You can talk to a financial advisor, credit counselor, or even a debt consolidation company. These professionals can help you create a plan to get out of debt and avoid further debt in the future.
Following these 10 strategies can help you avoid getting into debt. Budgeting, avoiding credit cards and paying off your balance each month are just some of the ways you can avoid getting into debt.