Avoiding Debt: Four Simple Ways to Stay Financially Fit

Debt is a part of life for many people, and it can wreak havoc on your finances and overall well-being. When you’re in debt, it can be challenging to make ends meet and put money aside for emergencies and your future. Here are four simple ways to avoid getting into debt and stay financially fit.

1. Cut Back On Borrowing

The amount of debt you borrow will determine how much your credit score will be impacted. Your credit limits are compared to your credit card balances, the same with loan balances and original loan amount. So try to keep your credit limit at the smallest number possible to avoid getting into a mess in which you are unable to pay back in the future.

It’s simple: the more debt you owe, the harder it is to finish paying it off. Don’t let spending get over your head – start saving! It also helps to ask yourself anytime you want to purchase something; do you need it, or do you want it? If you “want” it, reconsider your decisions as you don’t want to end up short of money when your credit card payment is due.

2. Reduce Your Credit Card Applications

Each time a credit score application is requested, your credit drops by a small amount. Over time, all those inquiries can significantly decrease your credit score and affect your chances of receiving low interest. These days, applying for a credit card is only a few clicks away, but being approved for one is an entirely different story.

In case you’re not familiar with how credit scores are scaled:

300-629: Bad credit
630-689: Average credit
690-719: Good credit
720 and up: Excellent credit

3. Create An Emergency Fund

One of the hacks most individuals never think of doing is starting an emergency savings account and filling it up quickly until you reach at least $1000. It’s better to be safe than sorry and have backup money in case you’re unable to pay off your credit card bills. You never know when you might be out of a job or have an expensive repair for your car to make.

The best amount to keep in an emergency fund should be around $1000-2500, which will keep you stress-free for at least a few months until you can get back on your feet. The faster you fill up your emergency savings account, the better. Additionally, the savings account can also help you catch up on your mortgage or car payments too.

4. Find A Licensed Insolvency Trustee

Licensed Insolvency Trustee companies exist to help reduce all the debt you owe. One such company, Sheriff Sole & Madej Inc, has a mission to provide ‘debt freedom’ for those who are inundated with any credit. This licensed insolvency trustee company is one of the biggest for debt counseling, which is strongly recommended for those in a large amount of debt. They understand credit scores like the back of your hand and know the ins and outs of eliminating debt while rebuilding your credit again.

Each session of counseling lasts anywhere between 10 to 30 minutes, giving you a positive outlook on life as you walk out of there. You will either be receiving advice for credit card debt, student loans or bankruptcy. For those who owe student loans, which is one of the largest debt categories in the US, here’s some advice from Sheriff Sole & Madej Inc:

“It is always best to start making payments right away towards your student loan, even during the six-month grace period. Also, if you are struggling to make any of your required monthly payments, you can contact National Student Loans Service Centre (NSLSC) to lower your payments so that they are affordable. NSLSC may lower the required monthly payments if you are able to prove financial need.”

In Conclusion

Debt is something that most people will experience at some point in their lives. However, it doesn’t have to be a life sentence. With a little bit of discipline and knowledge, you can avoid getting into debt and stay financially fit.

The four tips above – cutting back on borrowing, reducing credit card applications, creating an emergency fund, and finding a licensed insolvency trustee – are simple yet effective ways to avoid getting into debt. No matter what your financial situation is, it is always essential to plan ahead, be thoughtful about your spending, and seek professional help if needed.