Becoming debt free takes a lot of hard work and discipline. There are simply too many temptations out there for purchase, and too many offers of credit made that allow you to buy things you otherwise might not be able to afford. When you take advantage of a credit offer that gives you the ability to spend freely, it does not take long to accumulate a large pile of debt that can be hard to repay. The cycle of being unable to meet your monthly obligations as they become due, or living paycheck to paycheck can really take a toll on your physical and mental health and may even disrupt your personal relationships.
If you are looking to stay out of debt, here are five things to avoid:
- Borrowing money from your life insurance or retirement accounts without good cause. While the general rule is to leave these monies untouched, there might be a circumstance where the rate of repayment on loans of these types is lower than what you are paying on a credit card or other loan. If that is the case, it could make sense to take out a loan to pay off higher rate debt in exchange for a lower rate and faster repayment. The key is to avoid charging cards back up after pay off, and to stick to a budget so you can save for the future.
- Agreeing to a payday loan, which usually has a rate of interest at exorbitant rates. This type of loan is a money maker for the lender only and can leave you in more debt that before the loan was granted.
- Taking out high interest rate credit cards, or taking cash advances from those cards. Cash advances are usually at a rate even higher than the card itself, and this means the payment you send in every month barely touches the amount of the advance. Thus, you are in debt for a long period of time, at a high rate.
- Buy only what you need, and avoid impulse purchases. This is easier said than done, and a good way to cool off before making an impulse purchase is to wait a day or two.
- Make a budget, and stick to it! The key is to include extras and emergencies in your budget. If you do not allow yourself some wiggle room here and there, you will be tempted to splurge.
These tips, and more, are helpful for keeping you out of debt or for managing existing debt. But even with the most careful of planning debt still happens. If you are experiencing difficulty repaying what you owe, call us for help. You do have options, and we can help you find one that works for you.
For more information about debt management, loan consolidation, and what you will still be required to pay after filing for bankruptcy, contact us at www.DsouzaLegalGroup.com. We help by explaining your options and developing a plan that meets your needs.