There’s a fundamental difference between the mindset of people who live debt-free and those who don’t carry any debt. If you select two individuals from the same social, educational, and financial background, who earn the same amount of money every month, you might find that their financial mindsets are completely different. This can happen because two people can have very different perspectives on money.
People who are without debt may have had debt at some point in their lives. Or they might’ve even seen someone struggle with it, which prompted them to take a vow that they’ll never be in debt in the future. However, it doesn’t matter where you start with your money; what matters is how you proceed.
Here are the seven things you should avoid to prevent yourself from falling into debt.
1. Ignoring your accounts
You cannot afford to ignore even the smallest of things when it comes to your money. Debt-free people never fail to follow this principle. Even though you might think that it’s a little bit obsessive, debt-free people constantly keep track of their money and what it is being spent on. They know how hard it is to make money, and that’s why they give so much importance to every dollar. It would help if you tracked your money; this way, you control your money and reduce needless spending.
2. Neglecting money-saving practices
It is often the case that people who tend to fall into debt feel that they don’t have enough money. This feeling makes them avoid saving money and they keep on spending. They think that cash flow is temporary. It would help if you try to allocate your money in such a way that you know where your funds will go even before they’re credited to your account.
3. Falling for fraudulent marketing pitches
A big part of becoming debt free is to know how to prevent your money from being spent unnecessarily. Many scams happen, and you need to keep an eye out for them. If the scheme sounds too good to be true, then it probably is. Intelligent debt-free people don’t fall for these schemes; instead, they save up.
4. Wasting money on unnecessary things
People who don’t have any debt tend not to spend on items they don’t need. They look very closely at their bank statements and bills to ensure that they’re not paying more than they should. You won’t find them making any frivolous purchases. In addition, you’ll find that they’ll try to get the best bargain and save money wherever possible.
5. Growing shopping addiction
People without debt know that they shouldn’t focus on making purchases all the time. This isn’t good for your finances, and you should avoid this as much as possible. It is best if you don’t let yourself be defined by your possessions. Instead, people without debt consider experiences and relationships to be of a much higher importance, and they try to reduce any spending that can be deemed unnecessary. It is best not to let your money rule you, and furthermore, it should be the other way around. Rather than being addicted to spending money, you should be addicted to saving it.
6. Ignoring financial education
Debt-free people learn all they can about finances, taking the initiative on their own when managing their money. Not having any debt involves constantly educating oneself and applying what is learned.
7. Losing money-making opportunities
Becoming debt free is not an easy task, and you will need to work hard at it. Not only should you do all you can to manage your finances well, but also you should work hard in your profession. Maximizing your income is the best way to save some money for yourself, and it also helps you pay off your debt and to stay out of it. Debt-free people don’t let any chance at making money pass them by.
Once you start avoiding debt, you must also know the popular options to get out of your existing debt problems, if any.
Credit card debt and payday loan debts are some of the most common types of debts people tend to get into. One of the worst ways of getting into debt is through payday loans. Payday loans are a type of short-term loan that charges you high interest rates. Generally, you pay it off when you get your next paycheck. But if you can’t pay the total amount by the agreed-upon time, then you’ll have to deal with a lot of problems. The different ways you eliminate with your debt are discussed below:
Debt Management
If you have credit card debt or other bills that you need to pay off, then you can consider a debt management plan as an option for dealing with your debt. They don’t provide you with a loan; however, they work with your lender to reduce your monthly payments and interest rate. They also try to erase or reduce any penalty that your lender has imposed on you. Typically, the debt is paid off within three to five years.
Debt Consolidation
Debt consolidation is a method of combining several high interest debts into one and paying it off through one payment each month. It makes sense if your debt consolidation loan’s interest rate is low. This reduces the total amount that needs to be paid off. It works when you pay off your multiple high interest loans with the debt consolidation loan you take out and then you pay off the new loan.
Debt settlement
One of the ways by which you can reduce debt is by settling your payday loan debt. You can settle payday loan debt by negotiating with your creditor. You’ll have to work with a debt settlement company that will negotiate with your creditors on your behalf to reduce the amount that needs to be paid off. The rest of the amount will be written off by your creditor. This damages your credit score a lot, so you should think of debt settlement as an option only when paying off the entire debt is not possible by any other means.
Bankruptcy
If none of the above mentioned ways work for you, then you can file for bankruptcy instead. Bankruptcy will wipe your slate clean and allow you to start fresh. You should only opt for it if there’s no other way you can make any payments.
It is wise to be vigilant about your money to stay clear of debt and become debt free. You should try not to waste money on things you don’t need. Apart from living a frugal life and saving money, you should also avoid high-interest debt such as payday loans and credit card charges. These are the two most common ways people get into financial difficulties. If you are searching for ways to solve this issue, there are several ways for you to get out of debt, which include the above options. The sooner you make these choices, the faster you’ll become debt-free. Good luck.
Author Bio:
Catherine Burke is a financial writer for online payday loan consolidation. She provides information on successful cash loans and payday loan consolidation to help people get over a difficult patch. She lives in Kansas and has earned a frame in the matter of payday loans.
