If you’re looking for easy ways to budget money and avoid debt, then you’re on the right page. Debt is something that most people struggle with and avoiding it in the first place is the best thing you can do. In this post, we’re going to cover 5 easy ways to budget money and avoid debt.
1. Create an Emergency Fund
Did you know that most people don’t have at least $1000 in the bank in case of an emergency? That’s scary when you think about it. What if something unplanned happens? Where will the extra money come from to cover those unexpected costs?
If we find ourselves in this situation, most of us end up using our credit cards to bail us out. We end up spending what we don’t have out of necessity.
If you have an emergency fund in place, you’ll be better prepared to handle any unexpected expenses.
2. Only Buy What You Can Pay for With Cash Instead of Credit
Buying things on credit always feels like the right thing to do until you get your bill at the end of the month. In the moment, it feels good to get what you want, but you’re putting yourself deeper in debt each time because of interest charges.
Paying in cash is the best way to go if you want to avoid debt. If you can pay for something in cash and avoid using your credit cards altogether, then that’s what you should do. If you can’t pay for it in cash, then decide if the purchase is worth the interest.
Start getting into the habit of buying things without credit. Trust me you’re going thank yourself in the future when all your credit card debt is under control.
3. Before Making A Buying Decision, Sleep on It
Impulse buying leads to debt. You want to avoid impulse buying at all costs. Sleeping on a purchase decision gives you time to think before you buy.
The next time you get the urge to buy something, try going to sleep and see how you feel about it the next day. Chances are you may not want it as bad as you did the day before.
If you still feel like you must have it, gauge whether it’s a need or a want. Do you need it, or do you want it? If it’s just a want, then you can go without it.
4. Pay More Than the Minimum
Every month your credit card statement will show you the minimum amount due. The minimum payment may look like a nice manageable number, but it’s a subtle trap to keep you in debt longer.
Do not just pay the minimum due each month. Always pay more. Doubling the minimum amount due is a good rule of thumb to use when you’re trying to pay down the balance.
Credit cards charge you interest each month and paying the minimum will keep you in credit card debt for decades.
5. Never Miss A Credit Card Payment
Try your best to never miss a credit card payment. Sure, there are times when things happen and missing a credit card payment may seem to be the right decision. But trust me, it never is.
Missing a payment makes your next month’s payment increase because late fees are added to your bill. In some cases, missing a payment can even cause your interest rate to increase. Missed payments can also negatively affect your credit score. For these reasons, it’s best to stay on track with your payments. Whatever you do, always make a monthly payment.
Learning how to budget properly puts you in the driver’s seat when it comes to your money. There’s no greater feeling than knowing you have your finances under control.
The five tips discussed in this post can help you to avoid debt and take control of your finances. Start building your emergency fund now and be conscious of how you’re spending your money. Buy everything in cash when you can and beware of impulse purchases. If you have credit card debt, make your payments on time and always pay more than the minimum. Do these things, and you’ll be on the right track to financial stability in no time.
If you do find yourself in over your head and need advice on if a bankruptcy is right for you, please call Mr. Crawley at 870-972-1150 to set up a free initial consultation.