Have you ever felt like as soon as you get out of debt, you end up right back in it? Here are some tips to help you stay out of bad debt!
I’m a big fan of using good debt, but bad debt usually holds people back and it’s the one they struggle with the most, so that’s what we’ll focus on today.
- Make (and stick to!) a budget. A budget is a plan for your money. If you don’t have a plan, you can find that you’re spending more than you have and always playing catch up. Using a budget ensures that your money is accounted for. It doesn’t mean you’ll never have any fun or have to restrict yourself.
- Education is KEY to being financially free. You have to understand personal finance. A lot of people end up in debt because they simply don’t know how it works. Learn about types of debt, interest rates, repayment strategies etc.
- Use credit cards wisely. Get a credit card that has great rewards- whether it’s cash back, flight miles or discounts at stores. This basically means you’re getting paid for money you already planned to spend. And NEVER use more than you can pay off each month. Limit yourself to the amount that you would spend on your debit card.
- Plan for big expenses. Instead of putting big expenses on a credit card with no plan on paying it off, make sure that you budget and plan for things like Christmas shopping, vacations and back to school expenses.
- Understand why you got into debt in the first place. If you’re an impulsive spender, or you use spending to cope with being stressed or you’re always trying to keep up with friends and family, you have to take a look at those behaviors and work on changing them. A lot of us have financial trauma that’s never been dealt with which makes it hard to break bad habits.
Debt can be a good tool if used wisely, but it’s important not to let it spiral out of control. And it’s important to recognize your personal situation and take control of it!
Learn more about using debt properly here