A whole lot of people found themselves under serious debt after the global economic recession of 2009. People lost jobs or faced pay cuts, family incomes decreased drastically and some got dumped with countless of online personal loans. At the same time, cost of products increased so did the cost of things like education. Not to mention the fact that their liabilities like loan payments, mortgages, credit card payments etc. remained the same. However, it doesn’t always take an economic meltdown to trigger high debt. People can nearly go bankrupt even in normal circumstances by making bad financial decisions. Here are a few tips on how you can manage your money effectively and avoid growing debt:
- Firstly, acknowledge the fact that your money needs to be managed and not just spent haphazardly.
- Keep a list of your due payments where your credit card should be in your wallet to keep you from overspending.
- Keep a track of the checks you issue and when they get cashed so you know where the money in your account went.
- If you are forced to borrow money, try to repay it as soon as possible instead of repaying in installments. The longer you hold a loan, the more interest you end up paying.
- Try to get a ‘preferred customer’ status by using one bank for maximum number and kinds of transactions.
- Try not to keep multiple credit cards. Not only does this encourage over spending but it becomes tough for you track payments.
- Read documents like agreements carefully and understand the terms and conditions before you sign them.
- Credit cards have a certain ‘interest free’ time on purchases. Pay off this amount before the interest is charged to you.
- Create a budget for spending your monthly income. Try to factor in some amount of savings.
- Once you have paid off a loan, use the freed of monthly income to add to savings instead of spending it.
- Take time to look for bargains on expensive items.
- Collect your deposit slips for savings accounts to motivate you to spend lesser and save more.
- Invest your savings in low risk, high return bonds and shares.
