We millennials have a tendency to get into debts. Lack of discipline in spending more than the income we earn is leading to unwanted debt. Understanding financial boundaries or barriers which, if crossed, can seriously hamper one’s financial credit history or financial standing would help us avoid this situation.
Jerry Thomas fought hard to get out of a debt trap. He confesses,
“I wanted the best of lifestyles. I admit it. I used to flaunt my set of credit cards, borrow from friends until I could not pay them back. As a result, I lost respect among my friends and family. There was no one to guide or correct me. Thankfully there is now information online to help people like me get out of the debt trap or even avoid it in the first place.”
Here are a few tips that we found useful:
Pay First, Save Later
Pay off your monthly bills, loan EMIs, credit card payments before you start saving some off it. This will prevent unnecessary payment lags while you continue to save for a rainy day.
Budget your expenses
Keep a note of your standard monthly expenses and add on the prospective ones. Keep track of the funds in your account so that you do not run dry while catering to daily expenses. Borrow only as a last resort.
Use Debit Cards
Debit cards payments use the funds you already have in your bank account. With credit cards, each time you swipe it for a payment, you are basically taking a loan with a promise to pay the amount at the end of the month. Use debit cards to avoid a loan trap. When using cards online, ensure the site is secure.
Evaluate various investment options that promise good returns and match your risk appetite.
Try not to borrow
Always compare prices before making payments. Stay within your purchasing limits. Understanding lending options and how they compare with each other will help you select the right option
Stay debt free and independent of any unwanted financial burden.