Avoid more debt.
This is the one thing that you need to do if you really want to recover from all the spending you did during the holidays. Especially if you used your credit card to pay for all the expenses.
But how bad is it really? According to reports, Americans have less debt in the past 6 years – simply because the pandemic and recession made them more cautious. Does that mean you should relax?
Of course not! There’s still a lot of unpaid debt. Just because people have become more cautious with how they spend their money, it doesn’t mean they are exempt from paying off their debts. There’s still a huge amount of debt to pay off.
How can you do that if you just spent a lot of money during the holidays? It’s not impossible. But you need to be committed to it. The temptation to spend will be very high – especially if you remember how much fun it was to shop during the holidays.
But that’s over now and you need to be realistic with your finances. Avoid more debt, not because you don’t want to use credit anymore. Do it because you want to start the new year with smarter financial choices. It’s not like you won’t use credit forever. You’ll just have to get rid of those that you have right now to avoid accumulating too much debt.
3 ways you can avoid more debt
Fortunately, there are ways to avoid more debt so you can successfully pay off all the expenses you’ve made during the holidays. It’ll be challenging. But with the right strategies and the determination to do it, you should be able to complete it without any problems.
Here are three things that can help you stay out of debt.
Stick to your budget
Start by looking at your budget. It’s the start of a new year so this should be a great time to revisit your household budget. Is it still aligned with what you want to happen for the next year? If not, then you need to change it. Take some time to do this. If you have a spouse or partner, make sure you include them in this. Discuss what you want to happen this year. What goals are you going to reach and where will you get the funds to reach them? Put debt relief in there among your priorities.
Once you’ve revised your budget plan, check if it’s realistic. If it’s not realistic, you’ll have a hard time sticking to it. You’ll just end up being miserable and unable to stick to your budget plan. If that happens, you won’t be able to avoid more debt. So don’t make it hard to stick to your budget.
If you can commit to your budget, it means you can cover every expense you make each month. There won’t be any reason for you to use debt because all the necessary expenses are funded.
Don’t use credit cards like cash
The next thing that you have to do is to remove the habit of using credit cards like cash. Unfortunately, this is a common problem among consumers. 23% of Americans say they use their credit card for basic necessities. This includes rent, utility bills, and food. All of these are charged to their credit cards.
The truth is, there’s nothing wrong with this – as long as it’s planned. Some people use their credit cards for usual purchases because they get to earn rewards in the process. If you want to do this, there’s nothing wrong. But make sure it’s part of your budget and you won’t use it for something else. That way, you can pay your balance in full when the billing statement comes. This is a great strategy that’ll allow you to keep using credit without putting yourself in debt.
If you can’t do this, then it’s best to avoid debt until you’ve recovered from your holiday spending. Don’t use credit for unplanned purchases. This should only be done with cash so you can still control it.
Be content with what you have
Your mindset plays a huge role in helping you avoid overspending on credit. You see, debt usually happens because we love to spend too much. We tend to buy a lot of things that are usually not needed. All of this is with the intention of improving our lives.
It’s okay to keep wanting to improve something in our lives. But it has to be within reason. You should always consider your financial capabilities. If you can’t afford it, don’t use debt to reach your goals – unless it’s something that can help improve your finances like a new business or buying your own home. If the improvement can’t do that, then don’t buy it. Learn to be content with what you have instead of trying to have what everyone else has. That’s the best way to really avoid more debt.
Other tips to help you avoid more debt
What else can you do to help you keep your debts low? There are many strategies out there but the most important ones are those that help you develop good financial habits.
Here are some of the things that you can do.
This is one of the techniques that’ll help keep your spending down. If you’re practical, you’ll make smarter choices about your finances. You’ll know if an expense is really needed or not. Your mindset will make you focus on the expenses that you really need. This is a great habit to have especially if you’re trying to avoid more debt so you can strengthen your financial situation. By getting rid of debts, you can minimize the risk that your finances will face. It’ll be easier for you to build a stronger financial future if you keep making practical choices especially when it comes to your money.
Focus on repayment
Another thing that you can do is to focus on repayment. If you have debts from last year, pay them off. Don’t let it stay unpaid because the longer it takes for you to pay it all off, the more interest you’ll end up paying. This is why you have to research the best repayment plan that will help you achieve debt freedom in the quickest and cheapest way possible. There are so many options for you to do this. But make sure you take the time to research what they are. Don’t just go for the first solution that you find. Scrutinize each one so you can be sure that you are going to use the right program based on your specific financial situation.
Always have a goal
Finally, it really helps to always have a goal that you’re trying to reach. This will guide your financial choices. If you know that you’re trying to save up for something, you’ll think twice about using debt. You’ll try to avoid debt because you don’t want to waste money paying the interest. You won’t waste your money on unnecessary expenses.
Setting goals is a great way to improve your life without resorting to the use of debt. It’s planned and you have more time to figure out how you’ll fund it.