Wednesday, March 27, 2013

3 Easy Ways To Stay Away From Debt

saving and spending
saving and spending (Photo credit: 401(K) 2013)
We live in a tough economy when lots of people use lending services and borrow money to cover their expenses. Latest reports say that almost a third of Americans don’t have emergency funds or savings for a rainy day. Living without a debt is impossible. Take a look around and see how many people use credit cards and then struggle with credit card debt. 

But debt free living can be a reality if you really want it and your ready to make the effort. It’s necessary to work on your your financial habits and then finally be able to say goodbye to your financial stress. 

Start At Cutting Expenses 

There’s a simple rule for those who want to avoid financial problems: “You should spend less money than you earn”. Isl it one of the principles you follow? If no then it’s time to review your expenses and set a budget. Take a pen and a paper and write down all the purchases you make during a week. That will let you see a picture of your spending and understand if all the things you buy are really necessary. 

Sometimes it’s hard to understand the difference between our wants and needs. But if you want to be debt free it’s important to set a realistic budget and buy only things you really can afford. It’s not right when a person who has a small income buys luxury products with a help of a credit card or takes out a quick loan to go to a fancy restaurant. That’s why cutting unnecessary expenses will help you to increase your income. 

Build an Emergency Fund 

A bigger income will make you feel financially secure. It’s clear that if you can earn enough money - it will be easier for you to cover all the expenses and put some money away for the emergency fund. An emergency fund is a necessity for those who want to be debt free. 

Quite often people borrow money for emergency situations. Anything can happen and you never know what may happen to you. Unexpected financial problems make us vulnerable but if you have an emergency fund then there will be no need to borrow money or apply for payday loans from Island Loans provider because you will be able to fix all these problems on your own. Saving money for a rainy day should be the rule if you really want to be debt free. To motivate yourself to save, think of the benefits. For example, there will be no need to ask relatives or friends to lend you money ever again. 

Live Within Your Means 

If you have made a decision to change your life, then learn from your own mistakes and use the experience of other people. There are lots of occasions when consumers can’t afford to buy a home or a car, but they do anyway. They think that borrowing money is easy and their credit score is not bad so, probably, the loan application will be approved. But getting money from someone is always easier than paying back. 

You work hard to make money and need to cover different expenses and pay bills on time. If you have debt  there should be a place to make payments on this loan in your budget. That’s why it’s better to live frugally and stay realistic about your earnings and expenses.

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