For many, debt is something that is all-too-easy to fall into, mostly because it takes only a few minor financial missteps to be in monetary trouble. It only takes one overdue bill or unexpected credit card statement to sent your finances into a spiral, costing you thousands of dollars more than you ever thought could be possible. If these go unpaid, you may very well have a debt collector chasing after you – and no one wants that. To help prevent such a scenario for financially-confused people, we’ve assembled a few great tips that can help make sure your money stays exactly where it should be – your wallet!
Ways to prevent debt before it happens
One of the core ways to manage future debt is to find every way possible to prevent it. In the case of overdue bills, make sure you set up a calendar that contains the days you expect to receive bills. This way, you can adequately prepare for them, rather than having to manage them after an ill thought-out shopping spree. In this plan it’s helpful to have a different account for bill spending money (especially with predictable bills, such as mobile phone plans) so that you’re better aware of how much you can spend on disposable goods and entertainment. This planning should never involve “buy now, pay later” services such as Afterpay or zipPay, as these will very quickly add up financially and throttle your savings. Even if you require money quickly for staple purchases, such as groceries, avoid borrowing it, particularly from high interest lenders. Otherwise, you’ll soon find your small grocery shop has a long-term negative impact on monetary availability. The same goes for credit card use – it’s not free money, so treat any money spent with a credit card carefully and ensure you can pay it back with little hassle.
Tips to help you not spend frivolously
For some, the temptation to spend with credit cards occupying their wallet is too great. In these instances, try and ditch the credit cards when you can and pay with cash whenever possible. With cash you’ll be very conscious of exactly how much you’re spending and can tally as you go. If you absolutely need to have credit cards, do not adhere to a “the more the merrier” mentality – using credit cards to pay off one another while also spending big on unnecessary items will make a debt collection scenario almost inevitable. It’s also a very good idea to have an emergency fund, but in doing this also be very careful about what you deem an emergency. An emergency fund should only be accessed when you have no other option, such as when a (genuinely) unexpected cost arises, such as for a medical procedure.
Always be aware of your finances
BY paying close attention to the numbers that come in and go out, you can eventually develop a budget for yourself that will ensure you’ll never have to drown in debt. Just remember to pay close attention to anything involving interest rates, no matter how good they seem, as items that seem harmless, such as credit cards, are often the most dangerous. If all else fails, remember cash is king – you can’t avoid knowing how much you spend if you’re consciously withdrawing the money from your wallet or purse!