Staying Debt Free:

Some things to keep in mind to help you stay out of debt:

Prepare a budget and stick to it. First, list your monthly income and expenses. If you find that you're spending more than you're earning, you have a problem that needs to be addressed immediately. To successfully stay out of debt you should review your spending habits, be honest, as this will show you where your money is being spent and force you to decide if you want to carry on or if you want to change your spending ways.

Analyze your buying decisions closely before acting on them, and the more costly the item the more thought you should put into it. Weigh the price associated with the purchase of the item to the use or need you would derive from it. Also keep in mind that parts of the criteria used in your decision making will be emotional in nature not financial.

As an example consider the purchasing of a vehicle (for most people an automobile is the second most expensive item they will ever acquire, their house being the most expensive). Most of us find the ownership of a car to be truly convenient however don't think much of the associated cost of automobile ownership. Sound debt thinking will dictate that you buy the least expensive car that will satisfy your needs, and not succumb to the advertising and peer pressure to buy more of a vehicle than you need.

Be careful not to be nickel-and-dimed to death. The sales pitch consistently is that the additional expense is just pennies a day, and although this is true, if you accept enough of these the pennies a day items the amount becomes huge. Also watch convenience items such as take out coffee; at over a dollar a cup too many of these can eventually prove to be an expensive habit.

Get ahold of some savings and then pay yourself first and foremost. On a normal basis, put aside small sums for the eventual rainy day. In North America the normal household is just two pay checks away from financial ruin. That is that a loss of income for any more than two pay checks will result in people losing everything. Having some savings in easy to get cash will extend you wonderful peace of mind.

Be wary about the draw of easy credit. Not too long ago credit was difficult to acquire and individuals had to make a case to a third party to be given a loan, yet today this is not the case and people are bombarded with easy to get credit cards and more ways to borrow money. Though things like credit cards are always handy to have in emergencies, you should keep in mind that they need to be paid back and you probably incurred extra costs by making use of them.

Make sure you know the costs involved prior to accepting debt. While credit cards are convenient, they're one of the most costly types of credit, because interest rates will be about 28 per cent for department store cards and 18 or 19 per cent for others like Visa and Mastercard. But, many cards may be put to use with no costs to the user if they're paid off fully prior to the due date. After that, you have to pay interest on the whole balance. If you want or need the security of owning a credit card, use a bank card since they are more flexible and charge a lower amount in interest. If you aren't able to pay your card back in full, just pay as much as you can and don't let yourself get caught in the trap of only paying the very least due, resulting in the debt lasting significantly longer than need be.

Try to pay your bills in full and before their due date. Paying bills entirely and before the due date saves you money in late fees, helps you keep out of debt, and looks good on your credit history. If you aren't able to pay off all of your bills, be proactive and do 'damage control.' Work to pay back a few of the small bills entirely and proceed to call the additional agencies and inform them that because of your state of affairs, you aren't able to pay them in full at this moment. Give those agencies what you can and tell them you'll pay in full ASAP. Remember, never ignore those bills that you can't afford at the time because the debt will wind up with a collection agency, which will do everything it takes to get the money, damaging your credit rating for a long time.