Strategies For Keeping Away From Debt

Around every corner an advertisement is lurking, waiting for just the right moment to entice you with some good or service.  Whether it’s a new game, new movie, or new clothes, it is always more gratifying to spend money instead of saving it.  Lenders don’t help the matter with countless offers of pre-qualified credit that advertise amazing perks and claim zero percent interest rates.  The insatiable appetite for good and services coupled with the conception of the credit card has spelled financial disaster for many people.  So how is it possible to keep away from debt with all of this?     

All bad debt is accumulated by living above a standard that you can actually afford each month.  Bottom line, what this really means is that living within a reasonable budget will automatically keep you away from bad debt.  For example, if your monthly salary is $2000 but you spend $2500, then for that month you were living outside a reasonable budget.  Even when you charge to a credit card, consider that money spent.  To live within a reasonable budget, it is wise to set aside at least 10% of every paycheck after taxes.  So for a monthly salary of $2000, that means at least $200 should be saved every month.  This is one of the easiest ways to build a nest egg and keep away from debt. 

This transition from living a certain lifestyle into one that you can afford may be quite difficult.  It all comes down to choices.  Decide what is and is not essential in your monthly budget to live.  For most people, food and shelter are necessary expenses, but contrary to popular belief a cell phone, new clothes, and a gym membership are not. 

It is necessary to exercise a high level of financial discipline when making decisions to purchase anything.  There are two questions that are good checks to determine if you should buy anything; “Is it affordable?” and “Is it a necessity?” .  Something that is affordable does not become a necessity simply because you want it and are able to pay for it at the time.  Consider the money you could save by forgoing the purchase.  Is it worth it?  It is crucial to exercise this type of financial discipline to stay within a reasonable budget.   

It is also wise to only bring a credit card shopping when you have a list and have carefully considered your purchase.  This will help avoid any impulse buys.  When you do not have the credit right there with you the moment that you find something that you want, simply the act of having to return home to get it forces you to stop and consider the purchase.