5 Habits To Keep You From Getting Back Into Debt

getting back into debt

Clearing your debt can take dedication, discipline and hard work, but it’s a great feeling once accomplished. However, now that you know how easily you can slip into debt, and the effort involved in getting out of it, you’ll probably think twice about getting back into debt.

Here are five simple but effective habits you can develop to help you manage your finances, and keep your bank balance out of the red.

1. Budget in the areas you’re vulnerable in

Take a moment to think about where you’re most at risk to fall back into debt. Do you put too much of your retail therapy on account or are you too free and loose with your credit cards? And then budget in those areas if you aren’t already in the habit of budgeting in general. For instance, if the mall is a dangerous playground for you, allot yourself a certain amount you can spend in a month. If you’re partial to indulging in too many expensive toys, decide very carefully if it’s something you need or just want.

2. Have emergency savings

You can unexpectedly fall into debt with those little (or not so little) emergencies that creep up. Like your child needing dental work or your car going into the shop. Unfortunately life throws these curve balls at us, and unless we make some preparations for them they are a sure fire way to get back into debt.

It’s a common misconception that you need to be making a lot of money before you can start saving money. So begin building up your emergency reserve today.

3. Pay cash and use credit only with a plan

Always pay cash. It’s a simple enough habit though it might be hard for those used to paying on credit. Doing so though will eventually retrain the way you think about your money. In other words, you‘ll come to think that if you don’t have the cash for something, than you can’t buy it at that point in time. And that’s not the end of the world.

If there is a situation where it’s absolutely vital that you put something on credit, make sure you have a plan. Work out how long it will take you to pay the amount back, how much interest you will be paying altogether, and how to pay it off as soon as possible.

4. Always know how much money you have

This may seem simple, but keeping track of how much money you have in your bank account and wallet at all times is a great habit to curb your spending. If you don’t know how much money you have, the tendency is to think you have more available to you then is really the case, so you end up spending more than you realise. Keeping tabs on how much you have will help keep unnecessary spending in check.

5. Don’t keep a lot of money on you

This one is also very simple. The more money you have available to you, the more you will spend. So when you go shopping, only bring the amount you need and no more. (It goes without saying, but obviously this point wouldn’t work if you’re swiping with your card.) Only keep small amounts in your wallet, and leave the rest either in the bank or in a safe place at home until you need it.

Author Bio

Queenie Bates is a writer based in Cape Town. She loves shoes. Credit cards helped her buy shoes, but they didn’t do much for her financial situation. After using consolidation loans South Africa, she is now mercifully out of debt, and hopes to keep it that way.

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