How often do we hear about people getting thousands of dollars into debt in the blink of an eye? Unfortunately, that’s something that happens to millions of people around the world. A car accident, a bad gambling problem, or even a sudden illness can put us and our finances into a deep hole. While there are some things that we can’t control, there are others that we can control with no problem. Keep reading this article to find out some of the best ways to avoid debt in 2017.
1. Start saving now.
If we’ve heard it once, we’ve heard it a thousand times: we have to save our money. As simple as that may sound, it’s much easier said than done. However, it’s absolutely essential if we want to get a good start into the new year. Saving money doesn’t mean that we have to go broke in the process. We can even find a small side-job like babysitting, making baked goods, or even washing cars. Make sure it’s something doable in spare time and won’t bog us down after a long day of work. Then we can use the side-job money to fund a savings account.
Don’t have much spare time to devote to a side-job? How about doing a “money challenge”? A quick Google search will reveal dozens of them that we can follow if we’re trying to avoid debt in 2017. Whatever we decide to do, let’s make sure to get a plan before the new year.
2. Eliminate our excess spending.
One of the primary reasons that people find themselves in debt is because they spend way more than they actually have. While setting a budget is helpful, no one is perfect. We all deviate time to time from what we actually set for ourselves.
But here’s the problem with that logic. Let’s say I have a monthly budget of $100 for restaurants and fast food. But I spend an extra $2 on one meal almost every day. There’s no harm in an extra two bucks, right? Well, if I do that consistently, that’s an extra $10 a week. Therefore, I’m now looking at an additional $40 a month, which leads to about $500 extra a year. And if I have a credit card that’s costing me about $30 a month in interest because I carry a balance, the month’s extra $40 that I spent on food could have paid down the credit card. Also, that year’s extra $500 that I spent on food could have gone towards a savings account. It’s even enough money for a round-trip flight to just about anywhere on a domestic trip, if I wanted to take one.
See how such a small amount of money can have the ability to add on to our debt? Let’s do ourselves a huge favor and cut back on the excess spending to avoid debt in 2017.
3. Don’t accept more credit than we need.
How often have we received those colorful inserts in the mail from companies offering us 0% interest on a credit card or a $10,000 loan already preapproved? They tell us all the things that we want to hear, like getting the money within two days, or no APR for several months. Sometimes, they even offer us some kind of cash-back bonus with the first $500 that we spend on our new credit card. Take a bit of advice from people who have been there and done that: don’t fall for the hype. While having one or two credit cards is great for emergencies, multiple cards can get us into a lot of trouble. Not only does applying for multiple cards, loans, or lines of credit hurt our credit score, it also gives us access to way too much money that we probably cannot afford.
It’s wise to cut out excess spending if we don’t have enough money for it. If we have extra credit cards, we may decide to charge our cards instead of spending our actual money. For example, we have 0% interest for a year, and we decide not to pay anything on that card’s debt. The year comes to a close, and now we have a $500 bill due. Tack on the interest, and we could easily owe significantly more. If we hadn’t had that card, we wouldn’t have been able to spend that money. The moral of the story: if we don’t really need the new credit card, shred the application before ever getting the card, or cut up the card and put it in the trash.
4. Avoid debt and pay our bills on time.
Now this one may be a “duh” for many people, but others don’t realize the importance of paying our bills in full and on time. For starters, most companies have some type of late fee they charge if we don’t pay the bill on time. Those fees can be anywhere from $5-$20. On top of that, putting off our bills could put a damper on our credit. We don’t want to put ourselves into a situation where we must rob Peter to pay Paul. In other words, we don’t want to get behind on a bill because we had to use that money to pay another bill. Paying all of our bills on time and in full is the best way to avoid debt in 2017.
Life happens, and there will be times where it might be difficult to pay all bills in full every time. If we follow the above tips, then that should never have to happen. As long as we have that extra savings budget, we eliminate unnecessary spending, and we don’t add any extra bills (credit card, loan, line of credit) to our plate, then we won’t have to worry about not being able to pay all the current bills correctly. We now have the tools, so let’s get ready to avoid debt and financially succeed in 2017!
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