5 Debt Traps You Can Easily Avoid

By • Mar 9th, 2010 • Category: Debt

They used to say there are two things you can count on: death and taxes. However in the 21st century, I think it’s safe to say that we can count on debt, death and taxes. With the high cost of just about everything these days, it’s far too easy for debt to swamp us these days which is why we should try to avoid it whenever possible. Here are 5 debt traps you can easily avoid.

1. Budget

This is the most basic way to be sure you’re spending your money wisely. Setting up and keeping a household budget will show you exactly where and how your money is being spent and it’ll be all the easier to identify where you can reduce chronic spending. It’s the best way to trim the fat and keep your debts lean. In fact, it can help you eliminate all unnecessary debt in your life.

2. Cash = Credit

It’s a good idea to only buy on credit something you could afford to pay cash for. Asking yourself whether you could afford to pay cash for that shiny item that caught your eye will help you decide if it’s worth slapping down the plastic and incurring those high interest charges if you can’t pay the whole thing off in one shot. Also, if you’ve got the cash, then why not pay with cash? If not, you’ll wind up spending the cash on something else and not have it on hand when the credit card bill comes due.

3. Throw Out Those Credit Card Solicits

Sure, you expect to take on debt when you buy a house or car, but there’s a villain loose in the world today. It’s a money monster called The Credit Card! Run! If you’ve already got a card or two siphoning off your money, then adding more cards through tantalizing offers dropped into your mailbox won’t help. They’ll just mean more debt. Toss those solicits in the trash and concentrate on paying off the card you already have.

4. Shop Around

Of course, sometimes a credit card purchase is the only way to go. And when these instances arise, it pays to shop around. Or, rather, it saves to shop around. If you’ve tracked down an item essential to you, then hunt around to be sure to get the absolutely best price for it. Never buy on the spot. Check other stores, do some research on the internet. These resources are at our fingertips through the miracle of modern technology. There’s always a better price out there. Find it!

5. Watch Those Impulse Buys

Who hasn’t be shopping for something when something else suddenly crosses their field of vision and you can’t help thinking that you’ve always wanted ‘this’ of that it would be the perfect gift for someone you know. Just as you’ll save by shopping around, train yourself to never make impulse buys with a credit card. Although the same holds true for the cash in your wallet, at least impulse cash buys don’t saddle you with high interest.

Andrew Salmon is a writer, who, in addition to writing on financial topics like income protection, is also a published author who has been featured on Amazon.

 5 Debt Traps You Can Easily Avoid
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