Common Sense Ways to Avoid Debt

In these difficult, and uncertain, economic times, it is sensible to avoid debt. Avoiding debt is easier than people may think. You can use some common sense strategies that you can use to avoid getting into debt.

It may seem obvious, but do not spend more than you earn. In fact, spend less than you earn. Then put a little money aside each payday. It does not matter how little, a little each week or month soon adds up. Put the money into a separate savings account from your every day money.  This gives you a fund for emergencies, and unexpected expenses.

Look at your expenses and see how you could reduce them. Are you getting the best possible deal on your utility and other bills? A price comparison site may help you, to compare prices and services. There are often huge differences between different service providers, but do remember to read the small print before you sign any agreements. Look at what interest you are paying on your mortgage. It may pay you to move your mortgage to another company.

Do not waste money. A few days, writing down everything that you spend in a notebook can be very illuminating. People do not always realize where their money goes. They may not always realize how much that specialist coffee costs, each morning on the way to work or how much money they spend without even thinking about it. Make a budget and stick to it rigidly. Include in your budget all necessary expenses, an amount to save each week, or month, and a small amount of pocket money.

In recent years, people have become confused as to the difference between needs and wants and advertizing, credit and commercial companies have encouraged this confusion. Relearning the clear definition, between needs and wants, can help everyone to save money, and avoid debt. If you are unsure, as to whether something is a need or a want, wait a little while and see, whether you really do need the item or you could do without it.

If you already have debt on credit cards, try to pay it off as quickly as possible. If you cannot pay the full balance, try to pay off more than the minimum payment each month. If you have debt already, maybe you could take a second job to help pay the debt off more quickly.

Try not to spend further money on credit cards, unless you can pay the full balance at the end of the month. Credit cards can make money seem unreal. Try to use cash as far as possible, when you buy something with cash the feeling is different, counting out real bank notes, to pay for an item, is very different to handing a cashier that little plastic card. Real money causes the buyer to think carefully about their purchase and more careful with their money and spending. Using cash helps people relearn the value of money.

Look at how you use electricity and heating and reduce your usage. That does not mean that you turn everything off and shiver in six layers of clothing, but switching off lights in empty rooms, turning the heating down two, or three, degrees, and not leaving electrical appliances on stand-by all mount up and will save money on the eventual bill.

Try to examine every area of life, and see where you could save money. Think about spending and budgeting, distinguish between needs and wants. Live on less than you earn and put money aside regularly so that you can meet unexpected expenses, without having to resort to credit. Think carefully before making large purchases. Cut expenses wherever possible, but do remember to include a little splurge, or treat, money in your budget. These are common sense ways to avoid debt, handle your finances properly and help you to save money.