Is it possible to avoid the debt trap? Yes! – follow these simple steps and stay out of trouble.
1. It's possible to live within your means – believe it! Don't ever give yourself the excuse that there is not enough money. Wants expand according to your income – so the wise curtail their needs according to the income; not the other way round.
Do not allow yourself to pine for what you don't have; instead stay content with what you have. This doesn't mean you should not dream big, or be ambitious about your life’s achievement; rather that you should not allow these dreams to kill the possibility of achieving success.
2. Plug all venues that drain away your money. Very often little things you spend on add to a great amount at the end of the month. Calculate how much you spend on your cigarettes, cappuccino, snacking on fast food, etc. Cut as much as you can from frivolous expenses.
3. Abolish impulsive shopping. How many times have you seen something you loved, bought it, and then stored it away? Look around your home and you'll realize how many things are bought impulsively – yet they don't have any real value in your home or life.
Money wasted. When you want to buy something on impulse, stop! Leave the shop and wait for 48 hours. If you still want it, go and buy it; but chances are that you'll have outgrown the weakness you felt for it initially.
4. Insure and live safely. Do not cut corners in regard to insurance. Ensure that you have adequate medical insurance, auto insurance, home insurance, and so on. Take the advice of a financial authority and make certain you're adequately insured. Money spent on the right insurance is an investment toward a safe and carefree tomorrow.
5. Increase your income. As said earlier, you need not stop dreaming of growing big. On the contrary, you should continuously try to generate more wealth so you will be as comfortable financially as you envisaged.
Find ways to earn more by launching a home business, turning a hobby into an extra income, freelancing, and so on. While looking for ways to increase your income, ensure that you do not compromise your health or time spent with family. Seek occupations that give you both pleasure and profit.
6. Save and invest. Most people save and feel safe. What they actually do is kill their money as it stops growing. If you want to make the most out of your savings, you need to find ways to invest so that it grows at the highest possible rate. Once again, it's wise to consult a financial professional in this aspect.
7. Use credit cards very carefully. Credit cards are a wonderful boon when used properly; here "properly" means that you should be able to pay the bill in full before the due date. In this way, you enjoy a credit of about 45 days free of cost. When you pay the minimum due or part of the bill, you've started walking the pathway that leads to debt, because credit cards providers charge 2% - 3% compound interest on the outstanding balance. Check out how much that is per year!