Debt Free - Living Below Your Means

Notwithstanding that there are some who feel that incurring debt is healthy; most of us will not want to get into the debt trap. However, the bad news is that it is not easy to stay away from borrowing especially with the economic crisis and the ever growing cost of living. Once you get into debt and if you are not competent in handling your own finances, you are going to snowball your debt.

There are many ways you avoid getting into debts. Perhaps the best would be to go back to basic where you learn to live within you means. Let's look at some of the helpful tips below:

Start buying off-brand items. Most items, such as food, detergent, clothes, stationeries, and even electrical appliances are more economical in price as compared to the branded ones. Usually for these off-brand items, you can find them in regular stalls, factory outlets or close-out stores.

Always look out for bargains. Buying some branded and quality staff by paying cheaper price is nothing to be shame of. With less to pay, you reduce your financial burden, save more money and get something with quality, is it not a great bargain? You may find such bargains at factory outlets, warehouse sales, discount stalls and retail shops having sales to clear stocks. To add on to the list, you may also go online and find some quality item at online auctions.

Track your spending carefully. Plan a limit for yourself daily and record every cent that spent. This tracking is important as it prevents you from overspending and impulsive purchasing. This practice needs discipline and consistency and thus most people fail to follow through, and it leads to money problem at the end of the month. Consequently, people will resort to borrowing and start incurring debt. They could end up paying more money in terms of interest and even late charges.

Never invest unless you have some extra saving for such purpose. If you have extra money to invest, you should not invest more than what you can afford to lose. Planning you finances before your investment is extremely important. It is advisable to at least have some fund as your backup which is more than or equal to the amount you have planned to invest. Study and understand the policy involved of your investment thoroughly before you put your money into bonds, stocks, forex, or mutual funds. This is to ensure you know the risk you are going to take when you invest.

Spend only on what is necessary to you. Basic needs like food, shelter, clothes and education are some necessities which you to pay for. Avoid buying things which are considered luxuries. They are just items which could only fulfill your materialistic desire. I am not saying that you should lead a Spartan life; you can purchase these luxuries once you can afford them. But at the moment, delay that gratification.

Teach your family members, especially children, the importance of financial management. They have to learn to see the value of money and what is so-called 'hard-earned money'. Be firm to say 'no' when your children demand an expensive toy, even when they began throwing tantrums. Learn to make your own toys, so that your children can at the same time learn and appreciate what you are doing for them.

Get rid of those credit cards so as to solve your spending problem. If you feel more secure to have at least one of such plastic card with you, try leaving home without it. Always pay with cash if possible as you will not need to pay additional interest at the end of the month or risk paying late penalty if you happen to pay late.

Getting into action of making use of the above tips to live below your means is the first step you need to take. There are in fact many other ways which you can practice to avoid yourself getting into the sea of debts. The main point is that living a life free of debt and worry is always possible if you know how and be consistent in what you are doing.

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