5 Tips on How to Avoid Falling into a Debt Trap
Falling into a debt trap is like a vicious cycle. You will never seem to get out of it no matter how hard you try. It is easy to fall into a debt trap as there are a lot of things out there that is very tempting and we buy a lot of things that we really do not need. Debt these days have become so common that it no longer has a social stigma attached to it like I the earlier days. Having an EMI is so common that people would be surprised to know if you do not have one. It is so difficult to get out of debt and since there are so many instructions on how to get out of debt, it becomes important to know how not to fall into the trap and how to avoid falling into the debt trap. Here are some tips on how to stay out of the vicious cycle of debt.
1. Keep your credit card purchases to a minimum
It is always the small things that add up. Try not to use your credit card for small shopping trips. If you are out for a grocery run or buying clothes on a sale, try and pay for it in cash. Also do not get a lot of credit cards just because you are eligible for them. The more you have, the more you will be tempted to max them out. Try to carry just one card with you all the time, especially when you are out shopping.
2. Buy prudently
You needn’t have a TV in all the rooms of your house. Wanting a TV for all the rooms is a just an example of how we buy things that we really do not need. A lot of people keep upgrading constantly or buy new things because they can use their credit. This is a bad sign and you need to cultivate the habit of spending only that money you have.
3. Borrow only when it absolutely essential
There is no point in borrowing money to fund your extravagant lifestyle. You will get addicted to it and will only see your credit rating fall way below. There will be times when you will have to borrow money, like when you are in an accident and your insurance doesn’t cover everything or when you are planning to buy a house. Keep borrowing to a minimum and also get regular health check-ups so you do not spend a lot on your hospital bills.