There is nothing wrong with getting into debt once in a while. If you owe money, it shows you are human and as long as you are earning money, you should be able to repay the loan.

It is only if you become a chronic debtor that you need to get worried. To ensure that you do not fall into the debt trap, you need to take note of the ideas below.

Do not compete:

Most people get into debt (and stay in debt) because they are busy competing with their neighbors. This is sad because it is an unnecessary and unhelpful form of competition.

The truth is that you need find a way to stay out of this abnormal competition.

If your neighbor buys a bigger car, do not buy the same model. Continue to enjoy your small and reliable car and you will continue to stay out of debt.

Pay your debts:

Contrary to what some people may think, there is nothing wrong with borrowing money. There are times you may need to borrow money to meet some pressing obligations.

When you borrow money, pay off the loans at the right time. Do not let the interest pile up and do not try to default. The bank or finance house lent you the money on trust.

Show that you are trustworthy and repay the loan on time.

Keep your credit cards at home:

The guy who moves around with his credit cards is the guy who is likely to get into debt. You need to understand that most people who have fallen into the debt trap are people who have a habit of misusing their credit cards.

Credit cards are wonderful things to have. You can save yourself a lot of inconvenience if you have a credit card or two but these cards should be used in a sensible manner.

Abusing credit cards will only take you deeper into the pit of debt. Understand this and use your plastic only when you have to use it.

Avoid impulse buying:

Okay, you need to admit that you really love shopping. Well, most people do but this is not a valid reason to get into debt. The solution is actually very simple.

You are working and you are earning good money so you need to do some shopping sometimes. The smart approach is to have a shopping list. Plan your shopping and do not buy anything which is not on your list.

Avoid impulse buying and you will stay out of debt.

Save money:

This is one thing a lot of people find very difficult so you are not an exception. But the truth is that if you save money you will probably live a debt free life.

Do not believe you will spend and spend to your heart’s content and then save what is left after you finish spending. There will be nothing left to save if you try this impractical approach.

On the other hand, set aside part of your monthly earning and save this amount for the rainy day. It may be difficult at first but it will get easier with time.

Plan your money:

A plan for spending your money is called a budget. Nobody in his or her right mind can afford to live without a budget and that includes you.

So plan your spending and make a good job of it. If possible, break your earnings into monthly, weekly and daily sums.

Do not leave the house with more money than you need for the day and always return the balance at the end of the day to the place where you keep your monthly running fund.

Don’t abuse payday loans:

Like every other loan, the payday loan needs to be used carefully. The problem with this loan is that the interest can be quite steep. This is why you should take this loan only in an emergency. And while you are at it, the loan needs to be paid off as soon as it is due.

If you abuse this loan, the interest on the loan can make the original amount to double or even triple in a matter of months. Clearly this is something you can do without so do not abuse payday loans for own good.

Finally, pay cash as much as possible. Leasing, hire purchase, credit card transactions and all forms of deferred payment attract interest charges. You need to avoid all these things as much as possible.

Pay cash when you can and you will become a much happier person. This is Your Shortcut to Becoming Debt Free.

Tanya Calaban, Author

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