Proven ways to prevent debt and its problems

        

‘’Running into debt isn’t bad. It’s running into creditors that hurt.’’- Unknown.

Getting into debt is no difference from getting into trouble. Lack of sound financial plan has lead numerous businesses into bankruptcy. Thoughtless expenses amongst numerous other vices results to high rate of debt these days. But you can actually prevent yourself as well as your business from getting into debt and if you are already in debt, there are actionable steps you can take and you’re sure to regain your financial freedom.

Understand the concept of debt

‘’what can be added to the happiness of a man who is in health, out of debt, and has a clear conscience’’. - Adam Smith

Having a comprehensive knowledge of how debt works is your first approach towards dealing with it. Embrace financial education to understand how interest works; make sure you avoid loans with high interests and ensure to pay back on time. Do some financial exploration and you’ll realize that major debts, savings and tax problems could be solved with simple financial education.

Develop good saving habits

‘’The only man who sticks closer to you in adversity than a friend is a creditor’’ - unknown

When you decide to save, you’ve already decided to break the impulse spending habit that ruin so many. Reduce your expenses and only buy what you need and also create a budget for all your expenses. Avoid spending on impulse, if you’re an impulse buyer, delay that purchase that you’re about to make for a day or two and you may eventually change your mind. It is safer and advisable to automatically direct a portion of your income into your savings account to avoid direct access. You can also open a fixed deposit account and build up wealth with it. Only make deposits, avoid any form of withdrawal because if you do, it ruins its power to grow exponentially.

Avoid using credit cards

‘’Some debts are fun when acquiring them, but none are fun when you’re set about retiring them.’’- Ogden Nash

Use debit card or cash instead. Consider getting rid of all your credit card and you’ll be doing yourself a lot of good. The issue of credit card can be so bad that most people do not realize how much they spend because they do not see the money leaving their pockets. Pay with cash or credit card and you’ll be discouraged from spending beyond your means. Totally avoid the vulnerability of paying high interest rates that accompanies credit cards.

Learn how to earn passive income

‘’Rather go to bet supperless than rise in debt.’’-Benjamin Franklin

Whilst still employed, you can diversify your sources of income incase of unforeseen circumstances that may include job loss. Many people are currently in debt because they lost their job while others, due to accidents or other problems. With the availability of technology and internet, it’s easy to engage in one form of work or another that can be a source of passive income.

Keep a concise financial record

‘’The second vice is lying, the first is running into debt.’’ - Benjamin Franklin

You need to keep a clear and accurate financial record and understand the necessary accounting processes that are currently required in today’s modern businesses. Keeping a clear financial record is one of the major factors that separates most people that run a successful business from those that do not. You must seek to understand the basic concept of accounting, apply it in all your financial activities and you’re sure to live a happy financial life. It’s even easier these days to use a computer to maintain clear financial records.

Conclusion

You need discipline to stay out of debt. If you’re already in debt, then it’s obvious that you need to make sacrifices to stay out of debt and take absolute control of your finances. You can’t possibly claim to be building wealth whilst still in debt, so strive to regain your financial freedom today.

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