4 Ways To Control Debt

Controlling debt can be tricky thing to do, especially if we are so bad at financial management. However, debt can simply consume our lives if we are unable to do the right things. In many cases, controlling debt is as easy as limiting our expenses. As an example, we don’t need to pay four times as much, if we only need one fourth of an item. Here are things we can do to eliminate debts:

1. Hide credit cards:

Buying things are very easy if we have credit cards. With those cards in our pocket, we no longer need to bring money. In fact, we don’t need to have money to buy things that we want. We could simply choose the item and worry later.

This may build up a lot of temptation. Within the first year of owning the card, we may be able to resist the temptation; but sometimes we really want to have specific items, like smartphones or fancy clothes. When we desire to have specific items, it is important to keep cards in places that are difficult to reach, such as attic. Credit cards should be used only during emergency situations.

2. Understand psychological effects of credit:

Buying with cash is much cheaper than with credit. In any case, buying something at lower price is always good. We will have more money to buy other things. It makes good financial sense to use cash rather than credit. Debt makes the product much more expensive that its original price. Unfortunately, we tend to have an opposite view, because we prefer to get the item quickly without saving first. With credit cards, we could actually pay 50 percent more than original price and even double the price if we pay at minimum.

3. Purchase items only after we receive our salary:

If we plan to purchase a few items, we should do it only after we receive our salaries and we should pay them in full. Obviously, we shouldn’t overspend our salary, but this is still a good method than buying those items with credit cards. Buying $25 worth of gas on our credit card at the end of the month is a bad idea. Regardless of methods we choose, we should consider the one with the least risk. By spending properly, we won’t need to eat macaroni and cheese for the rest of the month.

4. Allocate cooling off period:

A lot of debt problems are caused by impulse buying and we can prevent it by allocating cooling off period. In this case, we should avoid brining our cards with us and this will allow us to prevent those inevitable temptations. If we find ourselves struggling with impulse buying, we need to calm ourselves. As an example, we could resist buying anything for a couple of days, except for gas and food.

This could condition our mind to prevent impulse buying. Most of the time, cooling off period could neutralize our desires. Many people have used this strategy and they are able to save more than $5,000 each year in impulse buying.

Leave a Reply

Your email address will not be published. Required fields are marked *