The best way to avoid dept is to live within your means; if you spend more than you earn you will be sinking more and more in debt. You can live within your means without cutting down on your life style; you can still obtain the same items as before by using some trick that were introduced in this section. There are also tricks and tips you can follow to void being in debt. The following section introduces some of those tips:
- Track your expenses. The hardest task a person can do is to track his/her expanses. The difficult past is not by watching every penny you spent, but by being honest with yourself. The best way of tracking your expanses is by getting a sheet of paper and write down every item you bought such as the morning coffee and the snacks from the vending machine. Do that for a month, and then, create an expense sheet and write down all your expanses LINK such as rent, gas, and include the total of every day expanses.
- Create an income sheet; write down all your revenues. Subtract the expense total from the revenue total, if the number is negative then you are not living within your means, go to the saving section where you can find some tips on how you can reduce your expanses, otherwise go to the investment link where you can increase your income by investing.
- Pay your bills on time, sometimes if you miss a payment such as cell bill, extra charges would be applied. Those extra charges would have been saved or helped paying your debts.
- Bouncing checks can cause you extra fees. See this link.
- Do not co-sign with anyone, once you do this debt is yours. It is often that the person who co-signed with him/her does not make the payment, and you end up paying it. All the sudden you find yourself in debt
- Try to pay more than the minimum on your credit card; the best investment is to pay off the debt on your credit card.
- Always pay attention to your credit card bill, if you see an extra fee does not feel good, call up the company and ask.
If you are already in debt there are ways to reduce your debt and keep a good credit score.
The following introduce ways the can be followed to reduce debts:
- Do not dig the hole deeper, if you are already in debt, cut your spending and at least stop borrowing money.
- You can consolidate all of your credit card bills onto one credit card with a low interest low. Look for a credit card that has lower interest and transfer all the debt of the other credit cards to this card. Some banks offer lower interest for a small period of time. Take advantage of this offer transfer the balances.
- Negotiate with creditor and banks. Some companies are willing to extend your payments if you showed them that your are determined to pay your debt. Whatever deal you do, make sure you stick to your part.
- If you have any saved money, or invested money, try to use some of this money to pay off your debt. By paying big chunk of the debt, you decrease the interest amount that you’re paying which help paying the debt faster.
- Always try to open a line of credit account. Usually the interest of the money that you borrow from the line of credit account is lower than the interest that you borrow from the visa cards; try to pay off your credit cards by using your line of credit.
- If you own a house or property you can always reduce your debt by following one of these methods
- A - Borrowing against the equity in your property. The interest rate is usually lower. You can save money by refinancing your home if the new interest rate is lower than the old interest rate. You should only use this method if you are not planning to sell the house for next few years; otherwise you have to repay the amount of the money that you consumed.
- B- You can also get a loan in the form of a second mortgage. The rate interest of this loan would be lower than the interest rate of your credit cards credit cards. Using this method would improve your credit score.
- Credit counseling agencies: There many debt management services that would work as an intermediate between you and your creditors, The may offer you a lower interest rates