It’s pretty easy to get into debt, but it takes some careful planning to get out. With a few simple tips, anyone can do it. However, sometimes it’s easier to get out of debt than it is to stay out of debt. The trip to getting away from your debt is learning some life principles that you can use every time you make a purchase. It all depends on how much money you earn and what you do with that money once it’s in your account. Follow these five rules and enjoy your newly found financial freedom.
- Keep a careful accounting of all money spent. This can be very difficult, especially if you are in the habit of pulling money out of your pocket during the day for anything that catches your eye. Be clear how much money is going into your pocket each day. Either get a receipt or write down everything that you buy during the day, no matter how big or how small. By going over your list of expenses, you will be able to see where your money is going.
- When you need to buy something, spend some time researching where you can get it for the lowest price. Don’t go shopping from store to store, because you might end up buying extra items that you did not intend to buy. Once you find the cheapest source for your item or service, go directly to that store. Take the exact amount of cash with you so that you will not need to charge it.
- Get away from using credit cards for your purchases. Credit card debt is very expensive and no matter how cheaply you find the item you are buying, it will end up costing you much more when you add on the high interest rates charged by credit card companies. If you have trouble paying your bill and make a late payment, it’s even worse because then you’re stuck with late payment penalties and fees on top of the high interest rates.
- Consolidate your debt to pay it off more easily. If you have bills that are high in interest and penalties, consider taking out a loan to pay them all off. Check interest rates such as from car title loans and your neighborhood bank and apply for a loan that will cover all of your debt. For some, it is easier to budget expenses.
- Evaluate your expenses on a weekly basis. Take a close and honest look at where your money is going. If for instance, you are spending more than you can afford on meals eaten out of the home, you will save a lot of money by preparing your own food and taking it with you. In other words, watch those small expenditures that don’t seem like they are very much, because they can quickly add up and become a major expense that keeps you from managing your budget well.
