Avoiding debt in the time of recession

Nowadays, it is said that our economy is an economy of credit. You need to borrow to make money - the same money that you will use to pay back what was borrowed. However, getting ourselves into debt is much easier than getting out if it. Through bad spending habits and uninformed decisions, debt can pile up and take longer to resolve. But you don’t need to live in a world of debt. Here are ways on how you can stay out of it.

Stop the pay check to pay check lifestyle

Most people spend all their money before they even have it. This can come from spending first before saving, and using the plastic card more often than necessary. Come payday, we are usually left staring at our account balance, which quietly tells us that we have nothing left

Stop living beyond your means

Stop spending more than the amount you earn. The general rule is to first set apart money for your savings, then pay the bills, and then spend only what is left. Sometimes we just want things, especially when you see others with them – but think about the debt you will incur if you spend money that you do not even have. Interest rates are getting higher, and banks now have charges for going over the limit and late payments, not to mention financial charges if you don’t pay in full.

Stop using credit

It is advisable to use credit cards only during emergencies – real life ones such as hospitalization or sudden payments that need to be paid for school or your family. Leave it at home if you are going to the mall, as the temptations to use credit cards are very high. If you are after the perks of rewards or credit points, be sure that you have the equivalent cash amount to pay back immediately what you charged on your card.

Stop delaying your bills

One very common mistake is paying only the minimum amount on your bills. This increases the amount of penalties and charges which could lead you to paying more than what you bought and purchased. Always make sure to pay in full, and pay ahead of time to avoid late payment costs.

Start saving up

Having an emergency back up in the form of your savings is a better idea than relying on your credit card alone. One of the most common causes of debt is that there is not enough money to cover expenses, which leaves us paying in credit.

A temporary relief to your debts

While acquiring debt to pay another is not really an advisable practice, logbook loans offer fast cash to those whose bills or other loan repayments are already due. Logbook loans offer more flexible repayment terms and do not have a lot of requirements to obtain. Some people use this method to consolidate their debts and owe them to a single company with the lowest interest rates.