Accumulating a large amount of debt takes time. Basically, you have to engage in poor financial decision making for a number of months or even years before your debt becomes too large to control. You may avoid the issue of debt or simply deny that your debt is a problem. However, the truth remains that you may have more debt than you can handle.
Regardless of your past financial problems, you may now be debt free. Being debt free can relieve a lot of stress and can give you the ability to be more liberal with your budget. However, if you want to stay debt free, there are some major pitfalls you will need to avoid.
*Do Not Buy Something You Cannot Afford:
Being debt free means that your credit cards have a lot of room on them. However, avoid the temptation of using your credit card to purchase something you cannot afford. Although you may have the intention of paying off the debt in a couple months, you may find that you have purchased more items on your credit card than you originally thought, or an unexpected expense may arise which requires you to utilize your money elsewhere. As such, that credit card bills accumulates interest. Before you know it, you are back in debt and starting to feel the stress of the situation.
If you want to avoid this whole mess, remember to use your credit card only for purchases you can afford and to pay the balance in its entirety on the next billing cycle. If you fail to do this, you may find yourself back in debt.
*Avoid Cash Advances At All Costs:
A cash advance is simply borrowing cash from your credit card’s credit line. The problems with a cash advance is that there is usually a fee charged for obtaining the cash, and the interest rate for a cash advance is usually substantially higher than the interest rate for purchases. As such, you may unwittingly dig yourself into a deep debt hole that may be difficult from which to escape.
*Stay Responsible And Stick To Your Budget:
Although it was suggested above that you might be able to be more liberal with your budget if you are debt free, such suggestion did not mean that you should go on shopping binges. The suggestion meant that you should look into more investments and other opportunities that can generate income. Otherwise, you should stick with your budget. Remember, it was your budget that has kept you debt free. Being debt free does not mean that it is time to revamp your entire budget. Stick with what works and avoid getting back into debt.
Remember, do not start making purchases you cannot afford simply because you are debt free. Make sure that you avoid cash advances at all costs. Finally, stay responsible and stick with your budget if you want to remain debt free.