In addition to the standard ‘write and stick to budget’ there are a number of further ways to help you stay out of debt. One of the most effective ways is to carefully think about whether you actually need to make a purchase – don’t just buy something because it’s on sale, on offer or because you’ve fallen madly in love with it at first sight. If after a lot of careful deliberation you realise that you do need it – then if you don’t have the money, save up for it. Remember that by paying for anything with borrowed money, you’ll end up paying a lot more than the price tag once you add on all that interest.
Another great way to stop impulse purchases causing debt is to freeze your credit cards – Seal them carefully in a freezer bag, and then put this bag into some water to freeze. Your cards will still be there when you need them – but the time taken for them to thaw out gives you thinking time about whether you really need to use them.
If you can afford it put a small amount of money away each week or each month. No matter how small, eventually this will mount up to a nice little pot to help cover any rainy day emergencies. Make sure that this money is put in a high interest savings account – and put the first £3000 in a cash ISA to avoid paying tax on your savings.
April 5, 2008
1. Never let your expenditure exceed your income. Use a budget to work out how much you can afford to spend on the various costs of living and stick to it!
2. Write down everything you spend. It’s surprising how much money you can waste on non essentials and not even remember where it went.
3. Unless you are possessed of sufficient discipline to use a credit card sensibly, it’s better to stick to cash. If your weekly budget for shopping is £60, for example, then take £60 in cash with you and leave the debit and credit cards at home. That way you can’t over spend. This is also a useful tactic on nights when beer can impair financial judgement!
4. Be leary of credit. If you can’t afford it now, odds are you won’t be able to afford it later. If you must use credit, check the APR, repayment period and possible penalties for late or missed payments.
5. Don’t carry money or credit cards “just in case”. That way you won’t spend on autopilot.
6. Never buy new when second-hand will do. Besides being better for the environment, buying second-hand is better for the purse.
7. Be a saver! Save up for planned purchases and treats. Shop around for good interest rates on savings accounts and watch the pounds mount up. It doesn’t matter if it’s only a small amount saved each month. It will add up.
8. The supermarket is not your friend! Supermarkets market their goods with great care and skill to seduce you into thinking you’ve got a bargain. If you didn’t need it in the first place, then it’s not a bargain. Write a list and stick to it.
9. Buy only what you need. Particularly for smaller families, buying large amounts of goods because they work out cheaper can be counter productive. Many products have limited shelf life and will end up going off and being wasted before they are consumed.
10. Enjoy your cash! Being free of debt and the “feel good” factor of some savings frees you up to really enjoy what you’ve purchased, rather than worrying about the debt which it has entailed. Go out and enjoy the debt free world.
March 1, 2008
