How to Stay Clear of Debt

| November 14, 2012
Debt Payment

Debt Payment (Photo credit: Images_of_Money)

Today, being in debt has become far more socially acceptable than it used to be. For the previous generation any kind of debt beyond a house mortgage really would have some kind of stigma attached to it and people would make sure that they stayed in credit.

However, now with easy credit available through store cards, credit cards and online loans, it’s all too easy to put purchases on credit and think about the consequences later. The trouble is though, that as soon as you miss a payment, you start to accrue extra interest charges that can quickly spiral out of control.

The secret to staying out of debt is to live within your means. This is easier said than done, particularly at peak spending times of year, like Christmas. However, if you can plan ahead, you can budget for expensive periods earlier in the year, putting money aside for Christmas spending.

Keep an accurate record of all your income coming into the household and all expenses going out. This should include everything – grocery bills, utility and communication bills, taxes, mortgage payments, as well as clothing, and any luxury items like gym memberships and satellite TV subscriptions.

If you are spending more than your monthly income, you need to look at where you can reduce costs to avoid falling into a situation where you are struggling with debt. For example, you could look at changing utility suppliers to get a better deal on your electricity and gas bills and even look at switching your mortgage if you can get a more advantageous rate elsewhere.

If that’s not enough, then consider doing without some of the extras that you have – cutting down on weekend trips or nights out until you feel that you can comfortably afford it again.

It’s not rocket science, but it is hard work to stay on the right side of the line when it comes to money matters. However, it’s far easier to live a little frugally in order to avoid getting into debt than trying to work your way clear of debt problems.

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Category: Budget, Debt

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