Many of us find it far too easy to get into debt these days. Even though banks are tightening up on lending to some extent, it is still really easy to get into debt. It might be that we have an overdraft that is easy to use, a credit card or that we have lenders on our high street that we can easily borrow from. Although sometimes debt can be very useful and a good thing, such as some student debt and some mortgages, there are many more types of debt that are not good. These are the types of debt that you need to stay out of.
Staying out of debt is much easier to say than to do for many people. However, there are good practices that we can all try which will help.
Keep a Constant Check on Current Account and Credit Card Balances
It is well worth keeping a close eye on the balances of your current account and your credit card. This will allow you to track what you are spending and how much money you have available. It is worth noting what bills you have left to pay and whether you have enough money to be able to cover the costs of those and spend on other things. You should then be able to adjust your spending pattern to reflect that, so spend less if you do not have much money available.
Budget so you do not overspend
Budgeting can be extremely helpful. You will need to find out how much you pay out each month on all of your regular bills and how much income you get. This will enable you to be able to see what the difference is and therefore what you can afford to spend on other things. It can be wise to use some of that money to put into savings, just in case you get a month when you struggle to cover all of your bills. If you have existing debts then it could be even wiser to use spare money to pay off some of what you owe. However, you will need to check to see whether there is a penalty for doing this and whether this makes it still worth doing.
Comparing prices on everything that you buy is a good way to make sure that you are not spending more than necessary. Obviously you may be aware that you are spending more on some things, perhaps because you like them better and have tried cheaper alternatives or because it is not convenient for you to shop at cheaper places. However, if you get into the habit of looking at prices, you could find that will enlighten you and encourage you to spend less. You might even decide to go without certain things because the price is so much higher than you realised.
Only Buy What is Necessary
If you are finding it really tight then you will have to look carefully at the types of things that you are spending money on and cut right back to the essentials. These days many of us have a lot more essentials than we did growing up. As a child my parents just paid for a water, gas, electricity, landline phone, insurance, fuel, food and mortgage as necessities and then a few extras including a TV rental and licence, and eventually a car and all the costs that come with that. However, now they also have a mobile phone and tablet, cable TV and broadband package, new clothes much more often, a more expensive car, homewares and home decorating more often, holidays each year, and more kitchen and household gadgets. This is the case with many people and means that our basic spending is now much more expensive and it could be time to think about whether we really need all of these things or if we can cut down, go without and avoid debt.
It is also worth thinking about what situations we get into when we are tempted to spend more than we can afford. It might be when we browse certain websites or go into certain shops and so it can be worth trying to avoid being in these situations so that we are not tempted to overspend or at least set a spending budget. You might need to hide your credit card to help with this!
Save when you can
If you are debt free, then try to put money in a savings account when you have some spare. Then you will be able to build up some funds so that if you do start to struggle and feel you need to borrow money, you will have some there to be able to use. Even if you are just putting a little bit in on the odd occasion, it can soon add up and could make a significant difference in the future.