8 Steps to Help You Stay Out of Debt
Considering the amount of stress and serious financial struggles that debt can cause, it’s important to do what you can to stay out of debt and make paying off debt a priority.
Changing your behavior in several small ways will enable you to avoid debt. While many of the changes in behavior are subtle, the results can be staggering.
Consider incorporating these behaviors into your daily life:
1. Spend less than you earn. It’s difficult to get yourself into debt if you spend less than you make. It doesn’t matter whether your salary is $25k or $250k. If you spend more than you earn, you’re going to wind up in debt.
2. Don’t use money to make yourself feel better. A big part of getting into debt is purchasing services and products you want but don’t need because you’re bored, or experience “buyer’s high” with new purchases, (only to be followed by remorse later).
3. Use cash. You can’t get into debt if you only use cash. Commit to using cash as much as possible. It’s a little harder psychologically to hand over $100 than it is to spend $100 on your debit or credit card.
4. Make saving a priority. Only those that make an effort to save are rewarded with meeting their goals. Save a percentage of each paycheck before paying your bills. And make it automatic.
5. Don’t try to be lucky. When the worst happens, people without emergency funds face real financial challenges and more debt. Those without debt have the necessary funds in place to navigate what life throws at them. With an emergency fund, it can be easy to handle being unlucky.
6. Develop a long-term plan. Staying out of debt requires a plan. Eliminating debt requires a plan. Getting into debt doesn’t require a plan. Having long-term financial goals is enough to keep debt from entering your life. Create goals, have a feasible plan, and stick to it.
7. Prioritize and practice self-control. Before making any purchase, ask yourself whether the item is something you need or merely something you want. Does it fit into your budget? Does it fit into your overall goals and financial plan?
8. Don’t avoid the amount of debt you owe. Know the total amount of all your debt and the total interest it is costing you instead of focusing only on your minimum payments. What else could you be doing with that money? How much sooner could you reach your goals if you didn’t have debt?
Is debt detracting from your life? Small changes can make a big difference!