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Easy ways to lower your risk of getting into debt

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If you are anything like most people you will have, at some stage, drifted into debt. It is all too easy to do. Sometimes you just give in to temptation one time too many. Other times, life knocks you sideways and you have to spend more money than you would like to solve a problem. For example, your car could breakdown and turn out to be impossible to repair. In which case, you may have little choice but to take out a loan you can’t really afford to buy a new one. These things happen, but, as you will see, there are ways to reduce your chances of going into debt.

mobile phone, bills, invoices, desk, computer, finance, money, business

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Work out how high your living costs are
Setting up and maintaining a budget is an excellent way to get a handle on your finances and stay in control. You can use a budget calculator, like this, to help you to do it. Provided you have your bank statements in front of you it should only take you about 30 minutes to get it done.

Look for expenses you can eradicate
Once you know what your living costs are, you can take a critical look at things and spot where you can instantly save money. For example, if you are paying for a gym membership and not using it, just cancel. You can do that very quickly and start to benefit immediately.
Look at ways to reduce the remaining bills
Next, take those unavoidable bills and see if there is anything you can do to reduce them. Switch energy providers; get quotes for things like your mobiles, internet and insurance before renewing them. That type of thing can easily save you hundreds.

Reducing what you spend on incidentals
Also, look at the little things you do. Visiting a café several times a day can cost a lot of money. So, consider going less frequently or switching to a cheaper place.
Take your income and deduct the unavoidable bills like your electric from the total to see how much disposable income you have. Decide how much of that you are going to continue to spend and save the rest.

Maximise your savings
The more you save the better. Savings give you options and play a big part in avoiding debt.
When you have money put aside, life’s emergencies do not have such a serious impact. If you lose your job, you can dip into your savings instead of being forced to take out a very expensive payday loan.

Learn to borrow cheaply
While you are building up your nest egg you may have to occasionally borrow. If you do so, make sure you do it in the cheapest way possible. Educate yourself about the options now. That way in an emergency you will know where to turn and not be forced into making a bad decision. This article by the Citizen’s Advice Bureau is an excellent source of advice on this subject.


This is a commissioned post.

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Money

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