Five Ways To Stay Out of Debt
In the past few years there has been so much happening to the world economy; companies have closed out, many people losing their jobs and of course goods are becoming more expensive. With time, people have turned to debt in order to supplement their basic incomes and therefore increase their spending power. However, though debt has been welcomed to solve the purchasing need for various goods and services, it has also become more of a burden than a solution. In few lines, I shall share with you a few tips to help you stay out of debt.
Get a Loan When Necessary
In this day and age the banks and other financial institutions have gone an extra mile by becoming more flexible when loaning out money. They will bring all sorts of special offers that make it so easy to get a loan and to top that up; the adverts only draw you closer.
However, simplicity in getting the loan should not be an excuse to use the opportunity. Hence, it is advisable to get a loan only when the need arises. Mind you, there is a major difference between a need and a desire. Try asking yourself need related questions like:
- do you really need to get a loan for a holiday?
- do you really need to borrow money to buy that 54 inch plasma TV?
Such questions will awaken the careful spender within you. It may seem silly but believe me it works.
Save Money Smartly (S.M.S)
SMS in this case, acronym for “save money smartly” is a smarter way of saving income than the traditional way of doing so. Most people, in effort to boost their saving culture, try to save income via fixed bank deposits and other low risk investments available at their disposal. Well, the SMS strategy of saving income is the complete opposite and brings to light some very interesting factors.
If you have income that you would like to save then its best to save it by investing through means that will give you a reasonable return, most likely, such investments are through entrepreneurial efforts. By formulating a business that gives you a better return which you can easily leverage on.
Some interesting fact – If you have a loan for instance, that is worth $1,200 with $100 as principle and $40 interest pay back each month. On the other hand you have an extra $100 worth savings and if you keep it in your savings account you will earn $5 worth interest in a month or may be slightly more with a fixed a deposit, the bottom line is that you will still pay more than you get to save or have as return on your investment. However, if you are able to invest that money via some other securities or some other efforts and get you a return of more than $40 a month then you will be able to comfortably eliminate your debt.
Invest In a Business
Views may vary on this but it has worked for many. By investing a in a business many have been able to create more income than their basic hence this eliminates the need of getting into debt for purposes of supplementing your basic income. Simply put, you only spend what you really have and do not go beyond your limits.
When you have your earnings at the table, it is only appropriate to plan your spending. Unplanned spending creates unnecessary tension to your financial muscle and can easily drive you into debt.
With the use of a budget, you have sound sense of financial direction on all your financial matters. Always ensure that you include even the little expenditure that you may have been neglecting because money is never spent all at once but in bits and pieces.
Create a Savings Plan
Apart from formulating a budget; it is also wise to come up with a savings plan or strategy. This can simply be achieved by minimizing the day to day costs that you may be incurring under normal circumstances. These are costs that are inevitable and reoccurring. Once, you are able to decrease or control these then you are likely to make major savings. This can be done in the following ways:
- buying goods from shops that have the best prices or provide discounts
- using a cooker that uses less electrical
- using a vehicle that runs on a lower consumptions engine
Staying out of a debt is in itself a continuous process. One must be willing to sacrifice and live within his or her own acceptable financial standards.
So go out today a different being, with a huge hunger to stay away from debt.
This article has been written by James who is a freelance writer that specialises in financial topics. You can visit his site here to learn more.