Ways to Stay Away from Bad Debts
December 18, 2009 – 3:13 amIntroduction: A lot of us rely on different types of loans in order to get certain things. We take out loans for our homes, cars and other items. With this, there is indeed a huge possibility wherein we can get bad credit. Getting bad credit is not just because of irresponsibility when it comes to payments. There may be other situations that may disable you to make payments for the meantime, but here are general tips for you to avoid bad credit.
Things You’ll Need: debit cards, proper budgeting, a good perspective, a pre-plan
Step 1. The first thing that you should do is to make a budget plan. Your plan should contain all that is necessary when it comes to finances. Stick to your proposed budget every month, and don’t spend more money than what you absolutely need. Channel all your extra money to paying your loans or into your savings.
Step 2: Do away with Plastics. Swiping may be easier, hassle free and sometimes safer because you won’t need to carry on cash along with you but this makes you dependent to it. Credit cards lure people to purchase things they don’t really need because of the thought that it can be paid the next time around. When the credit card statement arrives, it shocks you to know that you have paid more of the interest than the principal itself. This will surely be the start of your debt problems.
Not having a credit card limits the possibility of you spending more than you can afford. If safety is your concern (if you don’t want to bring cash, for example), then get a debit card or a prepaid card. This way, you only get to spend what you have and you don’t have to deal with bank bills each month. Just make sure that your debit account is a separate one from your savings account. This way you won’t end up spending all your savings should you be tempted to make purchases.
Step 3. In case you really need a credit card, get something with a low limit, and pick a bank that offers the lowest interest rates.
Step 4. Avoid getting loans other than your mortgage (or car loan), and don’t loan money for unecessary things. Loan companies have big interest rates, especially when you get a fast loan. They may seem great at first but they’ll cause you more problems than you think. Better save your money each month until you have enough to buy what you want.
Step 5: Don’t put a halt on your credit payments just yet during emergencies. Of course there will be instances where emergencies arise, you maybe ill or anything that may cause you to stop working for a while. Let your creditors know about your situation and talk to them about the possible things you can do about your remaining debts.
Tips:
Pay all your bills promptly each month. Pay above the minimum payment each month if you can. Keep track of everything that you’ve been spending. This helps you keep track of your budget even more.
Warnings: Avoid signing up for credit check since this will lower your credit rating.
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Tags: Avoiding Bad Credit, bad credit, Business & Finance, credit, Credit History, finance, Loan, Personal, personal finance