Stay Debt Free For Life
You might think that people who end up in debt aren’t like you. Ah their financial situation was always poor, and they probably lived on an extremely limited income, you say. Or, maybe you think that people who end up in debt are frivolous, constantly spending money that they can’t have and can’t afford. But actually, none of these things are true.
While it’s possible to end up in debt due to a limited income a lot of people find themselves facing heavy unpaid loans even when they have an average salary. And, people who do end up in debt don’t necessarily get there because of silly purchases that they could have avoided. They are situations where they had no choice but to spend money that they didn’t have. An example of this would be medical bills. You can’t choose whether you pay medical bills. If you need treatment, you have to pay the price and medical bills can be insanely expensive. They can cost anywhere up to five hundred thousand if you need surgery.
In fact, most people end up in debt due to some fairly basic mistakes. Mistakes, that, if avoided, can keep you debt free for life.
Borrowing From The Wrong Source
If you search online right now for ‘borrow holiday money’ you’re going to find a lot of websites offering this possibility. They’ll lend you upwards of five thousand grand so that you can go on holiday this year. Just think about how attractive that idea is for a moment. You don’t have to spend months saving, you don’t have to worry about whether you raise enough money. Instead, you can take out the money and head off on your trip next week.
Of course, there’s a catch with options like this. Before you have even arrived back from your holiday, you’ll owe a lot more money than you borrowed. This will be due to the obscene levels of interest that lenders like this charge. On top of that, you might find more unexpected bills such as late payment fees and even referencing charges. They might charge you for credit checks that in all likelihood, they completely ignored.
Companies like this are often referred to as debt traps. Think of them like Venus fly traps. They look attractive, tantalizing even and as soon as you land, snap! They look you down and never let go. They debt they cause will consume you, and it only gets worse from there. These companies often employ debt collectors who have a very flimsy understanding of the law on collections.
People borrow for a variety of reasons. One of the most common is to pay medical bills. However, another option would be to make sure someone else pays them for you. For instance, you might have been injured by someone else and if that’s the case they should pay your bills. You can see Bradford Legal for details on how this works or check out a similar company. Or alternatively, you can just make sure you have enough money in your account to pay the bills yourself.
No Savings Needed
You should be saving at least a quarter of your paycheck per month. That’s just to make sure that you have a decent quality of life when you retire. The chances are you won’t have all that money left when you retire though because it should also be used for emergencies. Hopefully, this ensures that if you do need money, you don’t need to take out a loan. Instead, you can borrow from your own savings and that way, avoid the issues with interest. You just need to make sure that you do pay yourself back for however much you needed to spend.
The problem is that many people find saving quite difficult. They have too many bills to pay and can’t afford to save on top of that. Or they can only save a tiny amount and don’t see the point so instead spend it on things that they want. If you find yourself in this situation, it’s possible that you’re not being honest with yourself. You must treat saving like a tax. It needs to be paid every month and should come as a top priority. You can start with a fairly small amount, something like fifty dollars a month. Squeeze that into your budget and then work to build it up.
If you’re struggling to save perhaps, it’s time to think about boosting your income. This doesn’t necessarily mean taking on another job or quitting your current career. Instead, you should look for ways to set up a second income. That way, you can make more money on the side and dramatically boost your saving possibilities. There are lots of side job options that you can take up in your spare time. For instance, you can think about working online.
You might want to try blogging. If you set up a blog, it can be a great way to earn a little extra cash and put some additional funds in your hands.
Living Beyond Your Means
Many people make the mistake of living right on the edge of their finances. If you do this, you probably have a couple of dollars left in your account just before you get paid. You’re pushing your income as far as it will go and this is a mistake. It’s probably because you’re living beyond what you can really afford. For instance, you might be living in a larger home then you should. Or, you could be driving around a car that costs a fortune in insurance. You get the idea, it’s not a smart move to spend all your paycheck.
So, if you do live in a large house, you might want to consider downsizing. This is going to free up a lot of your money that you can immediately put in savings and fall back on during difficult times. For instance, wouldn’t it be wonderful if when you were made redundant, you had upwards of a hundred thousand in your account to rely on while you searched for another job? This is how some people avoid debt while others fall into it. In short, you need to be a little more frugal with your spending and except a lifestyle underneath what you can actually afford. You may not take as many holidays as you like or buy the latest tech. But you also won’t be dragged under by debt.
Avoid these simple mistakes, and you can spend your entire life completely debt free!
