5 Ways To Stay Out Of Debt

  • By Collectrite Collections
  • 26 Oct, 2017

The Oxford dictionary defines a habit as: “A settled or regular tendency or practice, especially one that is hard to give up.”

The Oxford dictionary defines a habit as: “A settled or regular tendency or practice, especially one that is hard to give up.”

The psychological definition of a habit is : “An automatic reaction to a specific situation.”

In short, the way that we think about money defines how we use it. Our brain is incredible – but it is a creature of habit that enjoys doing the same things over and over and doesn’t enjoy change. Even when we know deep down that if we do something new it would greatly benefit us! At Collectrite we’ve seen many individuals and businesses struggle with debt, here are some easy ways you can avoid it in your everyday life.

  • Build your credit (but don’t abuse it).

Some people might tell you that in order to stay out of debt, you should stay away from credit cards. However, the opposite is true. When you sign up for almost anything involving money (car payments, mortgage, etc.), your monthly bill will often be based on your credit score. The higher your score, the lower your payment. You can’t get a high score unless you actually use credit, so it’s important to regularly use credit and pay your bills on time. Credit cards with rewards are also great because you get free things, like gift cards or travel miles, just for making purchases you’d normally be making anyways.

  • Can’t pay it off in 30 days? Don’t buy it.

This should be a no-brainer. If you don’t pay off your credit cards in full each month, your balance will increase based on your interest rate. This is how many people get trapped in debt. If you can’t pay it off in 30 days – you can’t afford it.

  • Track your spending.

Do you really know what you spend your money on? Have you heard of the free app called Mint ? Mint links to your bank accounts (even PayPal!) and tells you how much you earn and spend each month, as well as categorizes expenses, so you can see where your money goes. It also allows you to create budgets and alerts you when you’re nearing your budget limit for certain items. A great tool for gaining insight into your spending habits and finding ways to save!

  • Make a plan.

If you’re already in debt, don’t pretend like you’re not in debt. Things cannot improve unless you create a plan. Go through your expenses and earnings and find ways to save and cut back. You’ll feel more empowered with a plan, too.

  • Prioritize.

What’s most important to you? Being able to eat or being able to go shopping every weekend? Saving money or worrying about making rent for the second month in a row? Prioritizing can be a little boring, since you’ll end up spending so much on essentials — shelter and food — but watching your savings grow will be 100% worth it!

 When you start off on your journey to eliminate debt, there will likely be a bunch of new habits you have to start in order to achieve this goal. However, if you have never been in debt before, it is likely that you have certain good financial habits, even if you are not aware that you have been doing them! Debt is no joke, and never something to ignore. Own your debt or it will own you. At Collectrite we have been successfully assisting the business community collect debt for over 40 years. For more information, please contact us  today!

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