Debt making has happened faster than you think, but debt redemption is often a lot more difficult. And who has no debts nowadays?
Sometimes it may be necessary to make temporary debts in order to finance an expansion of your business, or to invest in real estate.
However, there are certain things that make the risk of debt reduced. In This article we therefore gladly share with you these tips to avoid debts.
How to Avoid Debt Trap?
Here are some of our suggestions to help you get out of the debt trap, which banks will not tell you.
1. Start repaying immediately
Pay off your debt as soon as possible, the longer your debt lasts, the more interest you will earn.
Interest will increase in a faster and faster way, which is why those loan companies are not in a hurry to let you repay.
Many companies will tell you their borrowing “daily interest rate” and “monthly interest rate”, which are seemingly very low percentages, but when they convert the adult interest rate, they will become a very high value.
This seems to be a very fashionable way of managing funds, but it will only expose you to huge interest.
The longer you delay, the higher the cost. So you will spend more money.
2. Do not buy on installment
Buying on installment can be very tempting when you see promotions with ‘ Buy now, and pay only in 2020 ′ as a slogan.
However, these purchases drastically increase the risk of future debts.
Therefore, always check whether you need the product effectively and whether you have sufficient reserves to be able to pay for the purchase.
Avoid buying on installment and avoid debts.
3. Phone Subscription
It is of course very attractive to have a telephone subscription where you only have to pay a few dozen per month. You will also get the latest luxury smartphone for free on top.
Ultimately, these promotions are often not as appealing as you might think.
Subscriptions are often expensive and contracts long. So if you agree to the contract you will be stuck to the subscription for at least a few years. If you wish to put an early stop to the contract, you will be allowed to pay a hefty fines for breach of contract.
Therefore, avoid such expensive subscriptions and choose a prepaid Variant.
If you really cannot avoid taking a subscription, be sure not to compare providers and to read the conditions accurately in advance. So you are sure that you are not paying too much.
4. Limit your credit card spending
It is very convenient to have a credit card. For example, if you haven’t received this month’s salary, it will give you more freedom and flexibility to shop.
Credit cards allow overdrafts of considerable amounts, sometimes as high as 2,500 euros in Europe.
If you can’t accurately track your income and expenditure, this may cause serious debts.
Fast payment by credit card is simple and easy, but it doesn’t give you a good idea of your actual consumption.
Stop using your credit card so that you can better understand your current situation and avoid credit card debt.
You need to pay attention to activities away from those credit cards, which will make you spend too much.
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5. Record your own income and expenditure
I clearly insisted on bookkeeping, but bookkeeping did not directly lead to the increment of money, so what is the significance of bookkeeping?
Almost all our life we have been dealing with wages and consumption.
When we cannot clearly define the monetary value of our life goals and our current financial situation, it is easy to cause monetary anxiety, which is an instinctive anxiety for unknown things.
Accounting and financial planning can help us alleviate this situation.
By planning and sorting out your financial situation, you can put the messy thoughts in your brain on paper, clearly see your income and expenditure flow, and liberate your brain.
Through scientific planning and adjustment, develop rational consumption habits to prevent their excessive consumption and money anxiety.
6. Control your spending
Your life cannot be static. Sometimes your income suddenly falls below the normal level.
The most important thing is to ensure that your expenditure is commensurate with your income, rather than sticking to a high consumption level when your income is low.
This may mean: no more weekend vacations, lowering or canceling phone subscriptions, stopping fitness membership, no more expensive vacations, stopping drinking and smoking, etc.
Although the ideal is beautiful, you need to look at yourself realistically.
Research shows that if your salary drops by 30% and you still stick to normal consumption, you may have a debt crisis.
7. Discuss your situation
If you feel that your situation is quite serious, we strongly recommend that you discuss this with your family and possibly seek professional guidance.
Out of your worries and knowledge with your partner, your children and your family.
Don’t just go to battle. You can choose to try to hide everything, but then your family will continue to spend money, and debts will only accumulate further.
8. Making money instead of loans
If you want to own a thing that costs a lot of money, it is important not to borrow easily.
Even if a temporary promotion of a product looks attractive, buy it before you have enough money.
This will not only prevent you from accumulating debts, but also bring you satisfaction and enable you to use your own money to buy what you have worked so hard to earn.
You may have heard of encouraging you to borrow money from brainwashing speeches by many businessmen, but believe me, there is no free breakfast in the world.
9. Don’t let high consumption limit you
You really don’t need that expensive smartphone to make a call.
Those commercial companies are trying to influence consumers to spend as much as possible.
One of the ways they do this is to publish advertisements to make customers feel that owning their products is a social integration.
However, don’t be influenced by this impulse to go with the flow.
Think about what you really need and avoid expensive and unnecessary extra expenses.
10. Save your money
Save unnecessary expenses and store them!
Frustration can lead to many unexpected costs. If you have a solid reserve, you can absorb sudden large expenditures.
In this way, you do not need to borrow money to eliminate debt risks.
11. Creativity and Innovation
Create, think and look for more opportunities to increase income.
If you have some extra time outside your normal job, find a small job and expand your income channel.
If you are a working person over 20 years old, then one thing you should know is that you should not let your work become your entire source of income.
Make extra money, which can help you get more and buffer sudden unemployment or extra spending.
Avoid debt and live better
It is very easy to borrow money today. When you submit your application online, your loan will be paid almost immediately.
The biggest danger and disadvantage of debt is that you must pay interest.
This will lead to less space for your consumption, and you will face more financial problems.
This will eventually lead you into a vicious circle that is usually extremely difficult to break.
These are the 11 ways we have provided to avoid the debt trap. What do you want to say about debt? Leave us a message!