How Do I Find Ways To Avoid Debt and Live Comfortably On A Budget?

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Answered by: Tauheedah, An Expert in the Avoid Debt Category
Today's economy has made our financial lives rather challenging. We are all looking for ways to avoid debt and live comfortably on smaller incomes. In order to bring our financial lives in alignment with the current economic climate, we need to think about debt and how it affects our everyday lives. Paying attention to our income and expenses may seem like a tedious chore, but our lives will be a lot simpler if we learn to control our spending habits and develop a sound financial plan.

The first step is taking control of debt. This will be the most difficult task in the entire process. Often the things we spend our money on are not necessarily needs but wants. Determining needs versus wants will alleviate much of the decision making when it comes to any purchase that you may make. Since times are leaner, you may want to think about getting only what you need and waiting until more ideal conditions to purchase that luxury item you have had your eye on.

Debt is a double edged sword; it is needed in some regard for major purchases such as a home or vehicle, as well as other major household items. The other edge of the sword is credit cards that are many times used unwisely to make frivolous purchases that can be paid for in cash. Credit is both a convenience and privilege, and if abused too many times, this is when we find ourselves in financial hardship and our debts begin to exceed our incomes.

The key to controlling debt is developing a financial plan that we can live by. This is often called a budget. A budget allows you to take a snapshot of your overall finances and the income and outflow of money. Where is your money going on a weekly or monthly basis, and how much of it do you have left at the end when all expenses are paid for? If your debts begin to outweigh your income and you find that you are living paycheck to paycheck, it is time to rethink how you are spending your income.

For one week keep track of all your purchases in a journal and save your receipts from those purchases. You will want to do this as a way to see what you are spending your excess funds for, and if these things are absolutely needed or can be eliminated from your budget. Monitoring your spending will get you thinking in the right direction once you see just where your money is going and how much of it.

Begin to eliminate the things that you can live without, like eating out three times a week, or that latte you purchase every morning before work. Try narrowing it down to once a week for these items and see how much money you will save in the long run.

Debt is something that is easy to get into and difficult to get out of. If you have credit cards either put them away for safe keeping or just cut them up and use cash. This will help you to avoid the temptation of using them to make everyday purchases. If you must make a major purchase on credit, make sure that you shop around and get the best interest rate that you can to avoid spending more for the item than you need to.

Following these simple strategies will help you to find ways to avoid debt and at the very least will help you to control your spending so that your debt will not overwhelm you and cause undue hardship.

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