As the number of ‘necessities’ for the urban crowd increases, debt shows its ugly head in every household. While there are emergency or unexpected expenses which could drag you to debt, it is fairly possible to fend off debt disasters with a few easy tips. The first and most important tip is to start managing your finances in a responsible way. Here are a few other counter measures to help you from spiralling down the finance ladder.
1. Settle unpaid bills ASAP
A major reason for individuals to amass massive debts is ignorance. Sweeping dirt under the carpet won’t solve the issue. Ignoring bills that you have received will only cause more misery. You might end up paying double or triple the amount with late fees and not to mention the bad credit reputation it will bring. Also, late payment could increase your interest rate making you pay more than what you owe. The first thing to get in control is to organize all your bills and making a plan to pay on time.
2. Savings will save you
Savings are your life support. When life comes crashing down, you can use your savings to cushion the burden. So, start your savings journey with two types of funds. One is your regular savings and the other should be your emergency fund. Make sure you set up auto-banking for your emergency fund account so that money will be directly transferred from your primary account before you see it.
3. Monitor your credit card usage
Credit cards are a major cause of debt and it is in your best interests to use them wisely. If you already have credit card debt then never try to miss out on your payment dates as the interest rates are very high. Meanwhile you could also look for replacement credit card providers who offer lower interest rates and free balance transfers. Also, make sure that you never use your credit card for cash advances as there is no grace period to pay back cash advances. Interest is levied on the principal amount from day one.
4. Insure all your assets
Another way of being debt ready is to get all your assets insured which also includes you. Make sure you get adequate dental insurance as your regular insurance does not cover dental expenses. Get your property insured against any risk from robbery to disasters. Make sure you have travel insurance when you are taking a vacation so that you are covered at all times.
5. Keep a constant check on your credit report
There are many individuals who don’t even look at their credit reports all their lives, analysing it is out of question. Getting your credit report is no big deal. Just apply Equifax or TransUnion to get your hands on your credit report. Your credit report copy will be mailed to you for free or if you want it instantly you could pay for a soft copy. If you need any help on understanding your credit report you could contact us and we can help you with that.
For more effective tips on avoiding debt disasters visit the local 4Pillars debt expert for further guidance.
