Good NestingDeep debt can make it hard to achieve your financial dreams or even get a good night’s sleep. Follow these tips to avoid falling into that hole or get out of it as quickly as possible.
Change Your Spending Habits
Your debt will spiral out of control if your spending is uncontrolled. Unfortunately, it’s easier than ever to spend and buy things now, thanks to the Internet.
Whether you spend too much in person or online, here are some tips for shifting your spending habits so you won’t acquire so much new debt:
- Only buy what you need.
- Fight impulse purchases by only buying things on your list.
- Block any websites that give you the urge to spend.
- Avoid looking at coupons or online sales that could trigger unnecessary spending.
- Remove any credit cards saved online so easy, one-click purchases aren’t an option.
Make Your Savings Automatic
If you’re not saving or investing, you’re spending. To avoid this, create an automatic savings account that will take a certain amount from your bank account and save it.
By taking this task out of your hands and making it automatic, you’ll have fewer excuses not to save. And by saving and stashing your money in a separate account, you’ll have less access to capital that can be spent on unnecessary items.
Build Your Emergency Fund
An emergency can quickly put you into deep debt if you don’t have any money saved for a rainy day.
By having an emergency fund sitting there should something happen, you can avoid using credit cards or loans to cover any issues. This will deplete your emergency fund, but it won’t put you into new debt.
On a side note, the need for an emergency fund means you shouldn’t take any large sums of cash you get only to pay down debt. If your emergency fund is lacking or nonexistent, build it up with that extra cash and then use the rest towards debt. This can keep you from accumulating even more debt in the future.
Use the Debt Snowball Method
Paying debt isn’t fun. It’s a chore, and that can keep many of us from trying to pay it off.
Make a list of all of your debts from smallest to largest. Then pay off the smallest ones first via the debt snowball method.
By eliminating small debts, you’ll gain momentum and feel more motivated to tackle the larger ones later on.
Set up Automatic Payments
It can be easy to forget to make a payment, which can damage your credit score, increase interest rates, and tack on late fees. To avoid this, set up auto-pay with your bank card, so you don’t skip a beat.
Pay Cash Whenever You Can
Swiping a credit card can give you a false sense of security as if you have unlimited purchasing power. Why? Because you get it right back after you swipe it.
Cash, on the other hand, disappears when you pay with it. Once it’s gone, it can give you a feeling of loss that you’ll want to avoid as much as possible. And to prevent it, you’ll make fewer impulse purchases and only buy necessities.
