How to Avoid Falling Into Debt

Debt, according to Merriam Webster Dictionary, is an obligation, something owed. It even goes further to define it as a crime.

It is one of those things that could happen to anyone at one point or another, and most times we feel like it’s out of our control.

Being in debt is never charming and it is something that everyone has to make conscious efforts to avoid. The key to doing this is to avoid certain habits that could lead you to debt.

We have outlined some tips below to help you live debt-free;

1. Have a Budget: Creating a budget helps you to be intentional about your money. It shows accountability in taking responsibility for your finance, lifestyle and ultimately yourself. Not having a budget means you’re setting yourself up for failure. And just so you know, checking your account balance to know how much money you have is not the same as having a budget. It doesn’t have to be extravagant either. You can start with something as basic as making a list of your expenses and measuring them against your income. Having it written down on a piece of paper is better than random calculations in your head at odd times.
2. Pay with cash: Try to pay cash for your purchases as often as possible. This will help you be more aware of how much money you’re spending and also help you keep track of what you’re spending money on. It’s also important to point out that paying with cash would help you reduce all those bank charges on card transactions.
3. Stay within your limits: This cannot be overemphasized enough. Live below your means. At every point in your life, you have to make sure that your income is higher than your expenses. It is not a crime to not be able to afford certain luxuries, however, as you already know, debt; is a CRIME. This idea of living within your means should not be misinterpreted as frugality, rather it is the wisdom in knowing when to say no.
4. Avoid impulse buying: As much as you can, avoid unplanned purchases. This is why it is important to create a budget in the first place. Don’t fall for deals that make you feel like you’re saving money by engaging in unexpected purchases. They actually harm you in the long run. Make sure your budget is comprehensive enough to accommodate every aspect of your money life, taking note of what is coming in and what is going out. With a proper budget system, it is easier to handle emergencies when they occur.
5. Always negotiate a lower interest rate: As much as we would like to advice you not to borrow, we are not oblivious to that fact that given life’s unpredictability, it cannot be completely avoided sometimes. But we strongly maintain that if you must borrow, you must negotiate for as low an interest rate as you possibly can. One of the dangers of falling and remaining in debt is borrowing at high interest rates. This makes it more difficult for you to pay back because not only will you be saddled with paying back the capital in full, you are also obligated to pay the amount of interest due.

No matter your stage in life, try to avoid being in debt. We can all agree that the thought of owing someone is not a comfortable feeling. Even when you may not have money to take care of your wants and needs, try to use your skills in exchange.