“Bad debt is sacrificing your future day needs to your present day desires.” – Suze Orman
People end up in debt for all sorts of reasons, but the first step towards any debt crisis starts with borrowing. When you borrow money you are essentially saying, “I don’t have the money right now, but I will pay it back.”
Most people welcome a helping hand financially, and borrowing is not a bad idea at times. However, we live in a business-minded world and very few people give for free, which means most of the time when you borrow money, you pay back with INTEREST.
One common source of debt is credit cards. Most credit cards come with interest rates, so from the start you are certain to pay back more than you borrow. The problem begins when you start thinking that there is nothing in the world money can’t buy. If you use a credit card, you should exercise good discipline and purchase only what you need, rather than simply whatever you want.
Here are some general tips to avoid running into debt:
Stay within your budget; try to maintain a good cash flow by spending less.
Pay by cash when possible, as that way you do not pay back additional interest.
Try not to purchase on impulse; this way, you only buy what you need.
Avoid digging into your overdraft and keep a close eye on your balance.
Only take out loans for emergencies; loans are similar to credit cards, so be cautious!
Avoid credit card scams; if it sounds too good to be true, it probably is.
By doing your research on companies before you take out a loan, you can the fake and the real. It’s also important to stay on top of your bills. When you have a bad credit history, nobody wants to do business with you. You’ll run into resistance from mortgage companies, utility companies, car companies, employers and more. Essentially, by avoiding debt you are protecting your future.
The Monday Independence Project will teach you to manage your money and keep you free from debt-based stress. Meetings take place on Monday at 7.30pm (also at 10am and 3pm).