Debt — everyone has it, but some just have more than others. The key to debt management is to eliminate as much of it as possible, as soon as possible. If you’re one of the lucky ones, you’ll be able to get rid of debt as soon as it comes, meaning you will pay off a bill right when you receive the invoice. For others, it isn’t so simple. Thankfully, there are some proven methods that you can use to help you manage your debt and keep it from going through the roof.
Create a Realistic Budget
A lot of people hate the idea of living on a budget, but what’s worse, living within your constraints or living beyond your means and paying dearly for it in the long run? Unless you want to spend the rest of your adult life owing someone, you will need to come up with a plan that will allow you to spend less money while still getting everything you need.
When creating your budget, you will need to plan out how much is needed for food, shelter, utilities, car payments and personal items (hygiene, clothing, etc.). Everything else is considered a luxury, including cable (unless you need the Internet for work), fast food and credit cards. Try to cut back on these expenses as much as possible. For instance, you can downgrade your high-priced digital television service to basic cable, and instead of turbo high-speed Internet, you can go with a much more modestly priced service. Eliminate fast food expenses by cooking meals at home (you’ll be surprised at how cheap grocery shopping is compared to eating out four nights out of the week).
Pay Bills on Time
One trick for limiting your debt is always paying your bills on time. If possible, try to pay a bill within the same week that you receive the invoice. This goes for credit card bills, too. In this case, you should limit how much you use your credit cards and try to avoid going over your budget when using them. You don’t want to have to spend months paying off the interest accumulating from a month of heavy spending. Plus, paying your credit card bill on time will be interest-free. If you fall behind, you can always opt for a cash advance if necessary until you get paid.
Use Cash Whenever Possible
When paying for expenses, you should consider using cash over plastic. A bank or prepaid debit card can make paying expenses easier and is alright because it doesn’t charge interest (since you’re using your own money). The plastic you want to stay away from are credit cards, which are responsible for the majority of most people’s debts.
The best way to get out of debt is to never get there in the first place. If you have yet to really delve into debt, this is your opportunity to prevent it. With the aforementioned tips, you will be able to steer away from the shackles of debt and have a happier life finance-wise. And if you are already in debt, you can put these tips to use right away to keep from digging yourself into a deeper hole.