Prepare a budget and stick to it.
Start out by listing all of your monthly income and all of your monthly expenses. If you are spending a fair amount more than you are making you have a big problem that has to be addressed now. To keep yourself out of debt you have to analyze your spending habits and be truthful about it. This will reveal how your hard-earned bucks are being spent and make you decide if you would like to keep going this way or change the way you spend.
Think through your purchasing decisions prior to acting.
The more costly something is, the more thought you should give it. Take the cost of the item you wish to buy and weigh it against the need or use you'll have for it. Furthermore, remember some aspects of the criteria you'll use to make a decision will be emotional, not financial.
As an example consider the purchasing of a car (for the majority of people an automobile is the second most pricey item they will ever purchase, their house being the most expensive). Most of us find the ownership of a car to be very convenient however don't think much of the associated cost of automobile ownership. Sound debt thinking will dictate that you buy the least expensive vehicle that will satisfy your needs, and not cave in to the advertising and peer pressure to buy more of a vehicle than you need.
Be careful not to be nickel-and-dimed to death.
The sales pitch consistently is that the additional expense is simply pennies a day, and on the condition that this is true, if you accept enough of these the pennies a day items the total number becomes sizeable. Also watch convenience items such as take out coffee; at more than a dollar a cup too many of these can quickly prove to be an expensive habit.
Earn some savings and pay yourself first.
On a normal basis, put aside small sums for the eventual rainy day. In North America the ordinary household is only two paycheques away from financial ruin. That is that a loss of income for any more than two paycheques will result in people losing everything. Having some savings in easy to obtain cash will extend you great peace of mind.
Be careful about the draw of easy credit.
It wasn't too many years ago that credit was hard to attain and people were required to make a case to a third party to get it. But now, individuals are bombarded with easy-to-get credit and other methods to borrow cash. While possessing access to credit in the form of such things as credit cards could be good in cases of emergency, always remember they must be repaid and you may have incurred some further costs for using them.
Make certain you know the costs involved prior to accepting debt.
While credit cards are convenient, they're one of the most costly types of credit, as interest rates will be about 28 per cent for department store cards and 18 or 19 per cent for others like Visa and Mastercard. But, many cards may be put to use with no costs to the user if they're repaid completely prior to the due date. After that, you have to pay interest on the entire balance. People who need or want the security that comes with a credit card should use a bank card because they charge less on interest and have additional flexibility. If you aren't able to pay your card back in full, just pay as much as you can and don't let youself get caught in the trap of just paying the minimum due, resulting in the debt lasting much longer than need be.
Try to pay your bills in full and before their due date.
Paying bills in full and before the due date saves you money in late fees, helps you remain out of debt, and looks fantastic on your credit history. If you aren't able to pay off all of your bills, be proactive and do 'damage control.' Endeavor to pay off some of the smaller bills in full and then make contact with the remaining agencies and explain that as a result of circumstances you cannot pay them in full pay what you can and assure them that you plan to pay in full as soon as possible. Remember, don't ignore those bills that you can't afford at the moment because the debt will wind up with a collection agency, which will do everything it takes to get the money, damaging your credit rating for a while.
