Avoiding debt doesn’t just happen, you must have a financial plan that is sound. You have to be wise about your money spending and financial decisions. Try to ensure that your decisions will have long term benefits and not just short term satisfactions. There a few tips to help you make better financial choices and keep you away from bankruptcy and debt.

Make a budget

Impulse buying can be fun at the time of purchase, but oftentimes, they have detrimental effects on your account statements. It is best to draw up a regular budget to keep you in track and call you back to line when you fall short. It is okay to have fun and get things that make you happy but you have to be wise about it. There’s no need to purchase something that makes you happy now and sad later.

Buy only what you can afford

Saying you can afford something doesn’t always mean that you have enough money to purchase it. In relation to how much you have, how wise it to to spend a certain amount on a particular purchase? This is what affordability really means. Spending 50% of your income on clothing means that you clearly cannot afford to do that because it is unwise, even if the total amount of money you have in the bank can accommodate it. In layman’s terms, cut your coat according to your cloth.

Beware of balance transfers

When you can pay off a debt, please try to do so. Quite often transferring your credit card funds to another card with a much lower interest rate works for a lot of people. In some other cases, making unnecessary balance transfers might not be the best thing to do, it just really prolongs a hovering problem.

Pay your Credit Card Balance on time

Try to avoid increased interest rates by making credit card payments on time. Stay within the monthly minimum payment to save yourself long term headaches of trying to clear accumulated credit card debts. A high credit card balance doesn’t you look financially responsible .

Carry few Credit Cards

It is financially wise to carry very limited credit cards about. If you have had a credit card balance that has gone out of the roof, it is not the best decision to acquire another one. Use your credit cards prudently, staying within a percentage credit limit.

Make more cash purchases

This is a very effective method of payment for staying out of debt. If you cannot pay for an item upfront, it means you cannot actually afford it at the time. The bills can be overwhelming, you have factored in the internet bill, your rent etc. and you’re probably thinking the easy snd convenient way is to settle these payments with a credit card. While this might seem convenient, it can lead you to a life of constant debt settlement. Another way to avoid this is by using a debit card, since the money is taken upfront from your balance. When trying to live a debt-free life, you have to be proactive about your spending and investments. A major key remains, buy only what you can afford. In this one statement lies a lot of other strategies to managing your finances. Being debt-free is absolutely possible, you just have to be willing to set financial goals and limits.