5 Tips To Stay Out Of Debt
Let’s first see what leads to a debt problem in the first place. A debt problem can happen due to several reasons.
First is when your income is less than your expenditure. You have ‘credits’ and ‘debits’ to pay off. The interaction of these two terms is important. Credit refers to money you obtain by borrowing. Debt refers to the opposite fun of credit borrowing. When you spend, you borrow money, but when you pay it off, you borrow no money. A simple illustration is if your salary is $5,000 and you borrow $2,500 from the next payday, then your household income is $5,000, and any pay rise or bonuses will put you into the higher income bracket.
If you do not have savings, then you are already in a debt problem, and you should either try to borrow money to cover your expenses or live within your means. Budgeting is an important tool that can save one from the mess of debt.
There are five Suggested Tips to stay away from a debt problem.
- Stay Debt Free- The most important thing is not to borrow. Do not have easy access to additional credit. Use cash. Do a budget. Take control of your expenditure. Buy only what you need when you need it. Look at your income and where it is going.
- Save Regularly- Set goals, and when you reach them, make a spending plan.Stick to the plan. Saving may not seem like much when you are making the plan, but in the long term, it will make what you save to grow. Traps: membership fees, insisting on a WRAP or rental, and other add-on services.
- Don’t Lose Your House- dream on a house; that’s a great idea. Buying in a specified period that has a certain balloon payment involved. When you continue to live in the house, you are actually building equity. When you want to sell the property, you see you no longer own it. So as a consumer, it is necessary to be wise about when and as long as possible.
- Banks are not your Friends – A lot of people will not want to borrow from the bank. It is not the bank’s money; it is your money. However, where does the bank get its money? From you! By keeping your money with them and not with other banks and building societies. Banks get their money by collecting from your personal and business banking, and in particular, if these banks are making saving for the bank, they will want to loan you the money.
Banks are not so interested in your circumstances. So don’t keep your money with them. If you fall behind on your payments, firstly, if you land up in the hands of a debt collection agency, also these agencies can be expensive – and can make a big difference.
Organisation, billions of pounds set aside each year to pay off outstanding debts, the largest being unsecured loans.I’m sure the banks don’t want you to know that – why else do they have such a large marketing budget?
If you take your money with them, that is your money working for them, and they have the freedom to loan it wherever they want to. So today, if your wage goes through the door, it’s just money for them.
- Make Debt Settlements Work for you- Think about this – There are millions in debt, yes? Millions. If you were to approach each and every one of these people, to offer them a settlement of between 25% per annum and 70% as a full payment, which would you be? – Not many would accept this. Why? The reason is obvious – They know that if they pay just 25% off, they will make a profit. They will have taken 30%, but made 200% overall. I don’t think they’ll accept anything less than 70% off. And that’s just to return the loan.
If you owe 150k and settle for 60k, that thinks that 70% of them would accept the deal – That’s a reasonable amount. And that’s just the start…
- Outsmart Debt Consolidation- Debt management companies get paid on commission only. That means that while it’s in your best interests to get the lowest possible interest rates, given that they are paid a percentage of what you pay them upfront, there is no single person in charge of sending them out. That person is a junior officer, and they typically see the volume of clients passing through them and normally don’t respond to requests. That means they are very motivated to keep their services, seeing to it that all the money they can squeeze out of you comes in the first case. Acquiring the company as a customer often means a pay-per-click campaign, a very expensive proposition.
