8 Tips to Help Stay Away From Debt

by Derek Clark

This guest post is by Sharon Smith. She is a financial writer associated with the Oak View Law Group. She offers advice on various debt management plans.

Getting into debt is much easier than coming out of it. The debt is considered to be a labyrinth where it would be difficult to trace the exit passage. This article gives you some real helpful tips by which you can save money as well as enjoy a debt free life.

1. Do not incur new debts:
Things you should avoid so that you don’t incur more debts are-

a. Stop using your credit card

b. Do not fall in to the trap of signing up for new credit cards

c. Do not go for payday loans

2. Pay off debts with high interest rate: Try to pay off debts with high interest rates. This is known as “laddering”. Talk to the creditors so that they can reduce the interest rates. Quickly pay off the high interest rate so that you don’t have to prolong the process of paying back such expensive debts. When you find that, there is a progress in the situation that would inspire you to pay off the debt in time. Study your income and see which one would be the most cost effective for you- to pay the high interest rate dues or pay off all the lower interest bills. A debt settlement program can help to negotiate with the creditor and reduce the interest rate as well as the outstanding amount.

3. Calculate the total amount of bill you have: Pile up all the bills together and calculate the total amount that you have to pay.

4. Don’t use your credit card instead use cash:
Stop using your credit card as it might tempt you to indulge in luxury. Pay cash for the things you are planning to buy then you can put a check on the habit of over spending.

5. Don’t ignore your creditor- try to contact them:
Talk to your creditors and be polite to them while you negotiate. If you contact them directly then they would be quite eager to work out a plan with you. Try to be honest and modest in your approach so that it is easy to convince the creditors.

6. Try to invest the money you have:
It is not that difficult to save money at a young age. If you invest money in your youth then you can reap the benefit in later years of your life. Investment restrains you from taking loans instead you can use your own money to get the things done.

Make sure you make a proper utilization of the money. If you use the money in stock market make sure that there is no risk in that investment. Before investing money at stock market study the market properly so that you don’t run at a loss.

7. Save money: Accept the fact that you are in debt and start saving money now. For a while don’t go to an expensive restaurant rather prepare a candle light dinner at home. If you think that you can’t afford new things then don’t try to borrow in order to buy it. Your ultimate motive for the time being would be to save money. Buying branded clothes can cost you a lot so it would be a good idea to delay the plans of shopping for the sake of luxury. If you save for few months then you will be able come out of the financial catastrophe.

8. Conserve and save money
: In winter if you do not need the thermostat then turn it off. Otherwise visit a library instead of wasting electricity at home. If the faucet at you home is leaking do not call the plumber for such simple task try to fixed it on your own. Turn off the lights and fans if not in use. If you and you colleague stay at nearby blocks then use you car every alternate day, one day ask him to drop you and the other day would be your turn. This is a great way to save on your gas bills. It is also a great way to bond with your colleague!

These 8 tips can help you to achieve a debt free life. If you are planning to save money then these tips can help you to pave the path to unburden your self from the horrid nightmare of debts.

{ 2 comments… read them below or add one }

RetirementInvestingToday May 15, 2010 at 3:04 pm

“Getting into debt is much easier than coming out of it.” Too true. When you think about it though it’s quite logical. For example, when getting into debt you spend £/$1 more than your current standard of living allows. This also means that you have increased your standard of living by £/$1. This is now your accepted plateau.

To stay at the same level of debt (excluding interest which of course makes it worse than this simple example) you have to remove £/$1 from your spend which would see your standard of living suffer and go back to the pre borrowing standard.

To get out of debt, in addition to those staying at the same level of debt, you have to then pay back that £/$1 borrowed in the first instance. This means you are £/$2 behind your peak standard of living meaning your standard of living is worse then when you first borrowed.

That is impossible to stomach for most.

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Steve May 15, 2010 at 8:54 pm

Thanks for posting! Your blog is Very Informative!!

Common Cents
http://www.commoncts.blogspot.com

ps. Link Exchange?

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