10 Tips to avoid getting into debt

Managing this risk will help to keep you out of trouble

Some people turn to a short term money lender and  have found themselves in a more serious financial predicament.  They are willing to pay a higher impost in order to get help quickly, and not too many questions are asked about their credit.

The original loan is hardly ever the problem. If the borrower can pay it back within the allotted time, along with the fee, then it was an expensive loan but not an ongoing problem. Unfortunately, it rarely turns out this well.  In reality, most people can’t pay the loan back quickly and have to take out another, then another. The best way to avoid this situation is not to have to approach a short term money lender in the first place. Right? This is easier said than done.

Good money management is always your best defence. So here are ten tips to putting yourself in a better financial position.

10 tips

  1. Review your finances. Then set a realistic budget. This means living below your means, not above, since having money left over each month creates savings.
  2. Start a savings account and increase the amount where you can with any extra earned cash. In other words, when you receive extra money, save it, don’t spend it.
  3. Be wary of phrases such as “rent to own,” “no money down,” “interest free loans” and “bad or no credit welcome.” Financing plans that target people with poor credit always carry high fees and onerous terms. Avoid them at all costs!
  4. Only buy items if they can be paid for in cash, or unless you have a realistic plan for repaying a loan. Following this advice would mean much less debt problem.
  5. Appreciate that there are no quick solutions for financial problems but instead focus on long-term goals.
  6. Never create a new debt to pay off an old debt. This just begins a debt spiral.
  7. Make sure you fully understand all loan documents before signing and certainly never sign an agreement with blank spaces.
  8. Consult a professional, such as a solicitor, if advice is needed on a loan agreement.
  9. Make comparisons of lenders or use a good Finance Broker before committing to an agreement.
  10. Take time to consider all the aspects of any loan. Be wary of pushy sales practices and remember that there is no obligation or commitment until a contract is signed.

Of course, consumers who are already over their heads in debt have to deal with their present circumstances before they can start saving. But at least they can avoid making a mistake that makes their present situation worse – and that means avoiding complicated loan contracts.