The best way that young people can avoid the web of debt is to simply avoid it. Learn what the signs are and steer well clear. Keep away from credit cards that offer you seemingly – ‘free money’ – and keep away from loans in which you know you will have trouble paying back – especially with the crippling interest rates added on.
Do not live beyond your financial means – as much as you would love too. And stick to your plan of austerity. Go by the mantra of, ‘I need’, instead of ‘I want’. The words ‘I want’ can see you slip into a spiral of debt that you may never get out off. Instead, when you purchase items, only go for those things that you really need and know you will use. By doing this it will save you money in the long-run. The money you save you could put to good use in the future.
Purchase a pushbike, instead of a car, as this will see your travel, car insurance and fuel costs come right down. Cycling is the cheapest form of transport there is – and it is also healthy. So there are may advantages to purchasing a pushbike. When purchasing for the home, buy only those things that will help you, rather than hinder and tie you down financially. Don’t buy for buying’s sake, as this will see you soon fall into debt. But rather, as explained above, buy because you ‘need’ that item – that purchase.
Keep away from catalogues offering you the best deals available. These too can soon see you build up debt that you really did not intend. If you see something that you really need, then save up your money and purchase it. That is the best way to go about it. However, if you insist on carrying some form of ‘card’, then apply for a debit card instead of a credit card.
A debit card works not unlike a pre-payment card, in that you can only spend what money you have ‘charged’ your card with. So, in other words, when you have a debit card you have to have money in your bank account in order to use your card. Your card is connected to your bank account, so, for example if you have $200.00 in your account, this will be reflected on your card. Once the money is used up on your card – the money that is actually within your account – you cannot use the debit card again, until you placed more funds within your bank account.
There are other ‘debit cards’ in which you place funds by using a newsagent. Take your card to the newsagent and tell him/her how much you want on your card. Hand over the relevant money, and your card will be swiped through a computer terminal, on the counter.
Once your card is ‘charged’ you will receive a receipt telling you how much you have placed on your card, the time and date too. Now you can use your debit card within any major store. Again, however, once your funds run out, then you have to ‘charge’ your card again.
The positive things about debit and pre-payment cards is that you are always in control of just how much you spend. This means that you can never overspend with them – as you would with a credit card. The other good thing is that there are no credit card bills at the end of the month. Furthermore, there is no APR – Annual Percentage Rate, to meet – as there would be with a late payment on a credit card.
So with a bit of common sense no one should, in theory, get into any kind of debt at all. Yes, you have to be hard with yourself, but it is all about knowing what you ‘need’ instead of what you ‘want’. Just changing those two little words will make a world of difference to your finances – and to the way you think about money.
Of course there are many other ways in which you can spend money without going into debt. There are other articles which covers that subject. Suffice to say, that what you have read within this article, will stand you in good stead for the future – in terms of saving money in the long-run.