Inflation has reached its peak especially in today’s 21st century. Prices of goods and services both necessities as well as luxuries are seen rising at a rapid rate. In order to enjoy a superior standard of living having sufficient amount of funds at hand has become a must. This has given rise to loans and advances economy wherein more and more people are seen buying funds at a heavy rate of interest. The end result of this is a deep ocean of debt that needs to be repaid as soon as possible. However, there is nothing, better than to counter the problem of debt and become debt free in due course. Let us now figure out how.
Plan Your Finances
One of the best ways to stay miles away from the debt trap is to plan your finances well before in time. You can begin by creating a written budget for yourself in the beginning of every month. This budget should house your various income sources coupled with the amount of funds that would be directed from each of these sources. You can include something as basic as your monthly salary, perks and other allowances as well as any kind of interest income that is coming your way. You also need to pay equal attention to the liability side and make sure that every EMI of yours is being paid on time. In short, you need to create a perfect match between your assets and liabilities.
Cash v/s Credit
Carrying a credit card has become a style statement especially for the entire younger generation out there. For a long time now, credit cards have been synonymously recognized as plastic prestige. Gone are the days when people were satisfied making cash purchases. Today, not only for online shopping, but something as mere as grocery purchase in a departmental store pushes individuals to flaunt their credit cards. Credit Cards have been used so ignorantly that eventually and unknowingly debt tends to pile up. This is exactly why you need to give a quick nod to cash purchases and turn a blind eye towards credit cards.
Affordability Complements Priority
Each one of us have our own likings and interests, which make us fall for a particular commodity or service. Many a times we get extremely smitten by the item in question and without thinking left, right or centre, block a handful amount of funds in the commodity or service of our choice. It is only when such a transaction is completed, we realize what an unreasonable decision we have made. We tend to overlook the affordability parameter out here. What we fail to understand here is that even though the item we desired, happened to top our priority list for quite some time, it could have been purchased on a latter stage with priority being given to other items of neccessity at that particular point of time.
Pay Off Pending Debts
For some time now let us keep aside people who have not yet incurred any debt and focus our attention towards those who still have debts to be paid off. If you happen to be an individual who has already attracted the debt trap, then in that case it is high time you consider waiving off the same as soon as possible. First and foremost, it would be in your best interest to list out all the debts that are yet pending to be paid off. Next up it is crucial for you to take an estimate of the total amount payable and so also creditors who need to be paid first and who would follow. Once this is done, you need to ensure that certain amount of your funds are going towards these pending debts every month, which would eventually lead to small drops bringing a complete end to the debt trap that you are stuck in.
Look for Cheaper Alternatives
Debt is mainly a result of exorbitant spending that we make. Be it a gas, water or electricity connection, purchase of any kind of consumer durables, investment in tangible or intangible items, there are cheaper substitutes available in each of these aforementioned areas. Many a times, we tend to make an uninformed decision because of which we are forced to avail loans. This is generally not a one off situation, but something that takes place repeatedly. The end result of this is heavy debt that remains to be taken care off. Hence, all said and done you need to carry an in-depth study of alternatives before zeroing down on any item in particular.
Consider a Part Time Job
If you are a person who cannot really compromise on luxuries or even high priced necessities for that matter, then it is quite obvious that you would be pushed in the debt pool sooner or later. The funds that you are drawing at present may not be enough to pay off these heaps of debt that you have created on your own. However, if you still wish to play safe and invest in first rate items without having to incur debt of any kind, then in that case a part time job would do some good. A part time engagement would ensure certain additional side income for you, which can then be utilized by you for taking care of the above mentioned areas.
Cut Out on Unused Memberships
A friend has signed up to a yoga class or an aunt of yours has decided to hit the gym, what follows next is you blindly signing up to a yoga class, gym or anything else for that matter irrespective of the fact as to whether or not you would actually be attending the same. Many a times, you pay off a lumpsum amount to these organizations or clubs and forget about it altogether. You are neither taking benefit of the services that they are offering nor trying to get a refund. If you are caught in such a situation, then make it a point to cancel out on all unused memberships right away and so also apply for a refund wherever possible. Similarly, next time do not irrationally follow into the footsteps of your friends, relatives or peers and save yourself from all the unnecessary debt.