How to Prevent Getting into Debt?
An ounce of prevention is worth a pound of cure, but can you really prevent yourself from going into debt? Well, professional debt management agencies say yes and offer many tips that are helpful for preventing yourself from falling into a debt trap.
Debt Management Solutions
If you manage your expenditures wisely, then there is no danger of going into debt. But most of the time, we tend to drift off course with our spending under the pretext of one excuse or another. While some unexpected necessities are valid excuses, there are various expenditures that we incur unnecessarily. But debt agencies offer effective debt management programs to help us learn money management.
Invest in a Savings Plan
Debt management experts suggest a savings plan as an effective trick to prevent going into debt. Saving at least three months of salary is ideal because it would cover any unexpected emergency situations like medical bills, job loss or moving from your current home. The interest rates of savings accounts are another reason to stick with this plan for the long term.
Here are some effective debt management tricks:
- Pay your monthly bills using a bank transfer. Some banks even offer a discount for making payments through online banking, so it is a smart move to take advantage of this feature.
- Use your credit card for convenience and not as a necessity.
- Credit cards are one of the primary factors that lead to debt. That is why debt management counselors recommend devising a strategy like setting a credit limit for yourself. Try not to cross that credit limit.
- Organize your earnings and expenditures in comprehensible accounts. It will help you know which bills are the priority to be paid.
- Debt management analysts also suggest income insurance. If you ever have to stop working due to illness or accidental injury, this insurance will make up for your losses during that time of need. However, it is advisable to check out what is covered in the insurance plan before buying it.
Considering the cost of education these days, student loans are hardly avoidable. And if you are an international student, it is even more likely you will need loans. But debt management planners still have some tips for you:
- Be serious about your studies. If possible, try to complete your education ahead of the scheduled time. It will save you from extra loans.
- Find a part time job. Make it a point to put 10% of your income into a savings account.
- Limit your partying habits. Once in a while is good, but if done in excess, it will turn out to be expensive.
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