Pages Navigation Menu

Everything Personal Finance

Dodge Debt – Four Ways That Will Stop You Getting Into The Red

Debt is a big deal. A lot of us live with this monkey on our back every day, and it can be tough. It means you are tied to a job that might be getting your down. Or unable to move house, even though you don’t like the area that you are in. You may be unable to pay for the things in life that makes it worth living like breaks away and nights out. Now, there is a lot of advice out there of how to get out of debt, but you also need to know how to avoid getting into debt in the first place. Then when you do pay off what you owe, you can ensure that you don’t get yourself back into that situation again. Read on to find out more.

Picture source

Balance the books

Now it’s simple advice, but how many of us actually do this each month? Actually, sit down and work out exactly what is coming in and what needs to go out? Probably not enough of us, that is why so many folks have trouble with debt.

Remember anyone can over spend, no matter what money they have coming in. It’s not a matter of being poor or rich, it’s just a matter of having your outgoings being more than your incomings. After all, everyone has heard of the example of the lottery winners that end up penniless and back up after winning millions!  

 

So how can we balance the books? Well at the start of the month record in a table the total coming in, and the total going out. Any money that is left over can be used for spending, luxuries, or even placed in an emergency fund to help pay for unexpected situations.

But if there is more going out than is coming in then you need to find a way to address this to restore the balance. Or you will end up having to put some of your bills on your credits cards, or taking out a short term loan at a vast interest rate just to help you pay for your day to day expenses. Which is going to result in a lot of problems with debt in the future.  

Record your spending

Another tip that you need to know if you want to stay out of the red is to make an effort to record your spending. This means everything from the big thing like the mortgage or rent, right down to the smaller things like a bottle of milk or a loaf of bread.

Why? Well because it all adds up, and even buying small things throughout the month can easily put you over your set budget if you don’t keep track of what you are spending.

Now back in the olds days folks used to carry around pocketbooks with them to record each item they have bought. But you don’t need to do this is the present day. As we now all have a phone with us pretty much 100% of the time, just download a free budget app, and use that to keep track of what you have spent.

Claim what you are owed

Another important aspect of dodging debt is making sure that you claim any money that you are owed. Why should you go into debt because of someone else failings? Well, that is what you are doing if you are ignoring a situation where you could ask for money that you have leant back, or ignoring compensation that is owed to you.

Of course, claiming compensation isn’t always easy, but you can recruit the help of a

personal injury lawyer, specialising in the field. Who will be able to assess your case and work out the best way to move forward getting you the money you need to stop you going into debt over medical expenses or because you are out of work due to your situation.

Picture source

Use the 30-day rule

Now, something that can take a lot of willpower but can really help you dodge debt is to apply the 30-day rule to non-essential purchases. Both for yourself and for the thing that the kids are asking for as well.

You may have notice that we live in an instant gratification culture, with instant downloads and next day delivery. This makes it super convenient to get any product we like, and it has changed our expectations regarding waiting for things that we want.

Image link

But by putting in place a 30-day rule, you can really help to realise whether you actually want the item you are buying, or you are just tempted by getting it straight away. This also means that you can save a lot of money on impulse buys by doing this and teach your kids to be patient in the process.