Being in debt is so common that people tend not to worry unless they feel like drowning. Of course, I am not talking about everyone, but most of us are in danger when we talk about debts. We either spent a lot that we find our self-empty handed or our shoulder leaned with debt, or we save so much that we deprive ourselves of all the little happiness life has to offer. To live in the balance is the key to happiness.
I always talk about how to be healthy on a budget or how to maximize our finances or how to organize our financial life well but today let me tell you how to keep your head high and nose straight. Or to say it more easily, how to avoid being in debt:
1. EMERGENCY FUND
Whenever I am talking to a youngster, I tell them how important it is to have an emergency loan because these growing people are not into saving like we are or like our parents were. When compared to my parents I save less and if you will compare me to my younger version you may see no saving at all and that is what concerns me.
The banking system has made loans look so fancy that kids these days opt for it more than usual. I am not asking to deprive you completely but at least save it a little because every droplet counts.
How to save up? Just buy a piggy bank and drop all the leftover cents from your day in it. You will be fascinated with the amount you may see at the end of a month or two. You may end up investing a small amount in stocks too. While on the subject, just keep in mind that craving for a cheeseburger or pizza does not come under emergency.
2. PAY ON TIME
With this era of electric and plastic money, we have gained so much but have lost a little too. With the help of a credit card, we buy whatever we want not considering our cash flow. What happens sometimes is our buying exceeds our limit, and we owe to the bank so much that we have to lose everything we bought.
The girl from the shopaholic haunted me for so long that I let my credit card go and started using the debit card but I use cash whenever I can because it is still the best practice anyone can be in. Please try to prefer debit cards as they restrict you from reckless buying.
3. KEEP YOUR BILLS IN CHECK
Almost every one of us is habitual of our parents paying the bill. So, when we are out there on our own the last thing we pay attention to is paying bills.
Sometimes we do have the amount but out of habit we forget to pay off the amount and then pay it with the penalty afterwards.
While sometimes bills were never our priority and we spent all of our money in our other expenditure. For both cases use an app called Mint, for what it`s worth, it can do your budget and remind you when to pay off your bills.
4. WHEN BORROW, CHOOSE THE LOWEST INTEREST RATE
In the above heads I explained you how to avoid debts all together but once in a while we all get into situations we never wanted to be in. In such case you have to have a loan so what to do?
Go for the lender who is willing to take the lowest interest rate from you. Most of the time it is easy to pay the principal amount, but the interest rate takes you down the shelf.