Tips to Avoid getting into debt

Anyone who has gotten a loan, has to pay it back along with interest. Whether you have credit card debt, owe money to family and friends, have taken loan from a bank or online lenders; you are under the pressure of paying it back on time.

If your loan was secured by a collateral, you would lose your asset if the payback is not on time. If your family or friends had lent you money, your personal relationships would be affected. If your credit card debt has accumulated and you haven’t paid it back in a while, it can be a continuous stressor for you and it would not only damage your credit history but also you would be charged with fees for not paying back your bill on time.

Also, whenever you are signing an agreement to get a loan from any of the different finance sources, you need to careful and always read the whole document and see if you actually agree with all the terms and conditions printed there. Never sign an agreement without reading it first. By doing this you can save yourself from any future unpleasant surprises. Sometimes, some online lenders add a term in the agreement about early repayment that if you repay your installment of next month before time, they would charge you.

If you want to avoid getting into debt, you need to follow some tips. These tips are as follows:

Plan a budget

You should always plan your monthly budget to avoid unnecessary spending of money. By doing this, you would be able to pay your monthly installments of loans on time and would not get into any big debt.


Saving money is always a good option for everyone. Whether you are a borrower or not. But if you have to pay your debts, make a saving account and save money there. It would help you in making your scheduled repayments on time.

Beware of extra charges

You should always check if the lenders are overcharging you. You should compare their interest rates with other lenders in the business so as to avoid being deceived and beware of scams.

Pay with cash

Whenever possible, use cash to pay for your purchases especially those that are costly. Otherwise, buy only what you afford. By doing this, you can avoid getting into big debt.

Avoid impulse purchases

You should not spend money on things you do not need and do not afford and remain within your purchasing limits.

Find lowest interest rates

If borrowing money is so essential for you, you should find lenders who charge the lowest interest rates.

Avoid losing your employment

If you do not try to become good and gain experience at you job or do not have good work relationships, you could easily lose your job. This would end your source of income and you will not be able to pay back your loans.

Understand debt-to-income-ratio

When you have to make necessary purchases, such as a car or home. This can drive you to take auto loan for car or mortgage loan for a house. Before getting loans to make such purchases, you should understand your debt-to-income-ratio. If you think your income would not be sufficient to repay those loans, don’t buy a costly car or house. You can buy a used car that would cost you less than a brand new one. You could also think on renting a house instead of buying one if your financial conditions do not allow you.