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Learn how to stay debt free
Staying debt free
Once you have let yourself accumulate debts, it is much harder to free yourself from that situation. Do not use your credit card too much over the festive season. Every year people let their credit cards blow right out of proportion, then suffer for it afterwards. Beware, you will pay dearly for those moments of weakness.
Dealing with the debts first: If you have any credit cards, cut them up because you will be tempted to buy more. Several debts need consolidating into one. Then you will incur one lot of interest charges instead of several.
To do this, go to the banks, and ask for the best personal loan, they can offer you with the least charges. Read the small print. Do not be afraid to ask at several banks and compare the different deals.
Get it in writing what they are offering. Ask for different opinions. With the decision made, let them organize payment of all the debts. Do not have the money put into your bank with the intension of paying them out your self, as you could be tempted to spend again and you cannot afford that.
Paying the loan: You can go two ways with this; organize a direct debit, then its automatically taken out of your account. This way you know it is paid.
On the other hand, you can pay it manually, if you can trust yourself to make the payment on time.
One Credit card
It is a good idea to have one credit card if you use your head and use it correctly. You buy something, then pay it back before the due date. That way it cost you nothing and it gives you a few extra weeks to pay for it. This will also help give you a good credit rating.
Now you need to make a budget and stick to it:
You need to write down everything you have to pay for the next twelve months. This means everything. write down every little incidentals, that you may have forgotten. Kid's birthday parties, dentist, pharmacy, school fees. Don't forget the housing loan or rent, insurances, vehicle licenses etc.
You might not know the exact amount, but jot down a rough estimate, allow more to be of the safe side. Add this up.
Divide this total by 52 if paid weekly or by 12 if paid monthly. You will now have an idea as to how much your weekly or monthly expenses will be. Bank this money into a savings account and only draw out the expenses as they become due. This way you will always have enough to pay your bills as they come in.
Before you go shopping, check out the specials, make a list of everything you need and stick to it, DO NOT, be tempted to buy extras. Where possible, buy extras of the specials if you will be saving on the overall article.
When cooking, make enough for two nights and freeze one, do the same the next night, to change the flavor you could curry it or similar.
If you need extra money, why not make some type of craft. You could take this opportunity to clean out your cupboards and have a garage sale. Get rid of those things that you never use, and sell your crafts. Buy second hand, its amazing what a little coat of paint will do. Check out the other garage sales. If you are good at bartering, you could buy things at one and resell it to make a profit.
Make your house loan payment every week if possible, this will not only pay the loan quicker, but reduce the overall cost as well. Instead of spending your tax refund, pay it straight off your loan.
The only way to stay debt free is to work at it and pay cash for things. Do not use a credit card; that makes the banks richer.
- Tips to Reduce Your Debt
Tips for reducing your debt