Whether you’ve fought off debt in the past or simply want to avoid the experience altogether, you know that it pays to be proactive.
To ensure your long-term financial survival, here are some tips and tricks for avoiding debt.
- Automate your payments and savings
We’ve written detailed instructions on how to automate your monthly payments, but the main lesson here is to pay your bills, and pay them on time. Otherwise, you’ll rack up late fees, time, and perhaps lose power.
It’s also a good idea to automate your savings by setting up an automatic transfer every week or month. Try to build 3-6 months of savings. If you have money left over, you can send a certain amount to your Roth IRA or 401(k).
- Set up sub-savings accounts
Are you looking to buy a house? Get married? Go on vacation? Set up sub savings accounts for these goals. Learn how to set up sub savings accounts.
- Check your credit card statement at least once a month
We recommend using a credit card for all your expenses for the extra consumer protection and rewards it provides, but it’s important to have the cash on hand to theoretically make the purchase with your debit card. If you can pay the full balance each month, you can enjoy all the benefits of a credit card with none of its finance charges. This is true of most credit cards, but be sure to read the cardholder agreement for details on your account.
Before you make your payment each month, review your credit card statement and track your spending. Just categorize your expenses and add them up. It will give you insight into where your money is going and give you the opportunity to dispute any fraudulent charges.
- Only spend what you can afford
According to a study from Bankrate, 6 out of 10 Americans cannot pay an unexpected $1,000 expense with savings. The next time you buy something, anything, ask yourself, “do you need it, or do you want it?”
- Maintain full-time employment
In some cases it’s not possible, but the goal should be full-time employment if you want to avoid future debt. If you’re out of work, your new full-time job is finding a full-time job.
How DebtBlue Can Help
Just as unemployment is sometimes unavoidable so is the accumulation of debt. No matter what debt you have, you want to know how much you owe, what your interest rates are, and have a plan for reducing expenses and increasing take-home pay.