Debt is Bad MMMKay

Here are some invaluable tips to keep you from going into the red with your spending.

Not all debt is bad, but the large majority of Americans are in some form of bad debt.

Let’s look at some ways to minimize this debt or avoid it altogether.

Harmful Debt

Harmful debt is the debt that accrues on credit cards, lines of credit, or any high interest loan.

These credit sources will drain your account faster than you can say “bubblegum fantasies”.

There is also good debt out there including mortgages and student loans to a degree. At least with student loans, you have more earning potential after you graduate.

Ultimately, debt is the opposite of wealth and these tips will help you to avoid debt from the beginning and never get into the cycle that we have.

1.Pay Yourself First

Sure, you say, we’ve heard this before, but how does it effect our ability to stay out of debt?

Because having an emergency fund and a good amount of savings makes life’s little uh-oh’s not become debt in the first place.

Remember when your car broke down, or when you needed a new outfit for a job interview, or that time your window AC fell out of the window(don’t ask)?

Life happens and you need to be ahead of the game.

Make a commitment to have enough money stashed and handy for the unpredictability that life can throw at us.

2. Don’t Make Large Purchases on Credit

Buying a home is one large purchase that is good to purchase on credit.

A mortgage is generally very low interest and a home is an asset that can help to build your wealth over time.

The large purchases that we make as a society though, will drain our wallets with great speed. You should not be buying cars, phones, TVs, boats, clothes, shoes, furniture, or even appliances on credit.

You might think these things are necessary, but ask yourself if they are necessary to be brand new, or are they necessary to cost more than what you have in your accounts?

Don’t let these large purchases put you behind for years because you want the latest and greatest.

3. Avoid Store Cards

You stroll up to the register, arms full of candy and greeting cards, when the wonderful and helpful cashier explains that you could get 10% off by applying for their store card! Deal of the century!

Nope, this is the worst idea that was ever conceived.

The large store chains do this to entice you to shop at their store more often, and then pay them interest on what you buy!

The biggest loser in this situation is you.

Store cards are not a good way to build credit score either, avoid them at all cost.

4. Get Control of Spending

While paying yourself first will help with emergencies, the true way debt is avoided is by never creating any.

Create a budget and stick to it, that way any “wants” get put to the back burner.

Spending should be painful to some degree and going into debt should be even more painful!

Set up your budget and revise it frequently, don’t get complacent about finances. We are talking about your personal wealth here, don’t let your “wants” control where your hard earned dollars go.

Spending frivolously will lead to debt, which will lead to unhappiness!

5. Find a Hobby

Don’t look at me with those crazy eyes!

This one is important! A hobby is a way to fill your time instead of the old past times of shopping or watching TV.

The more active and engaged your mind is, the better off you will be.

This can include, working out, painting, photography, riding a bike, fishing, and pretty much anything your little heart desires. Hobbies will make you feel better about what you’ve done with your day as well.

A hobby keeps the mind active and off of things like shopping or worrying about menial things.

Bonus Tip

Make sure your family and loved ones are on board with your mission to avoid debt, especially your significant other.

You can’t fight the urge to spend without the help of another, and you definitely can’t fight it if your loved ones are going along with their every urge.

This entire list can be put into practice and made into a game of who can spend the least! Ok, maybe it isn’t quite that easy, but with these tips you’ll be on your way in no time.

What are some ways that you avoid debt? Do you have any tips that would help others to stay above water and out of debt? We want to hear from you!