It is said that one of the easiest ways to break friendships is to lend your friend money; the person that you have lent will try to avoid you as much as possible and will not pay you. Well, off course, that isn’t true in all the cases and friendship isn’t worth it if you can’t lend someone some cash. But it goes a long way to tell us how bad debts can be to us. It doesn’t matter wh0 the creditor is. It could be the money that you owe the grocery store, money that you have borrowed from your friend or money that you owe to the dance teacher. It is all debt
So what can you do so that you can live a debt free life and not worry about credit reports and all that?
Here are five tips for your consideration:
Live Below Your Means
Regardless of how much you earn, you probably earn more than one or two people that you know who seem to live a satisfied life. The secret to living a debt-free life is to know how much you can afford to spend, and living within it. You shouldn’t go into debts because you want your daughter to go for ballet lessons just so that you can convince yourself that you are not that so broke after all.
Keep Track of Your Expenses
Assuming that you have a budget, it is time that you kept track of your expenses so that you can see what you can and cannot do without. It is usually very difficult for most of us to stick to a budget. Therefore, get a piece of paper where you will record every single item that you purchase. Do this for a month and compare it with your budget. Correct where you have been going wrong. With time, you will improve your buying habits, limiting yourself only to the things that you need.
Do Away with All Your Credit Cards
Yes, you heard me. Credit cards have a funny way of telling us to consume what we do not have. Therefore, dispose off all your credit cards and ensure that you make your purchases with cash. In case you have to use a card, then get a debit card that will limit your spending to the money that you have.
Split You Income Immediately You Get It.
It seems to be a bit old fashioned, but if you are the kind of person who loves structures and without structures you simply can’t be effective, this is a good one for you. Immediately you earn you income, divide it and place it in different places depending on what its use is. This may mean opening different accounts for your income or simply having several envelops where you place your money.
Always Save Some Money
It is possible that most of us can save money if we really want to. As you prepare your budget, ensure that the money that you intend to spend has savings as one of the expenses. This way, you won’t look at saving as optional; instead, you will know that it is something that you must do.
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- What to do with your Money when the Economy Declines: Four Suggestions
- Credit, Debt, Banking: Are you Paying too Much?
- What is Necessary to Open a Free Checking Account?
- Eight Ways to Consolidate Your Debts
- How to Keep Your Cash by Tracking Your Spending