More than fifty percent of households spend more than they earn. What does this mean for their finances? If you are spending more than you earn, than you are likely to become in debt in a short period of time; After all, there is only so much credit available for consumers to maintain high spending habits that allow them to live above their means.
There are many techniques that consumers can use to ensure that they are spending as little money as possible – and avoiding any debt that may accumulate in the future. Using these techniques, smart consumers have the ability to save thousands of dollars of potential debt that could become daunting in the future.
Examine your expenses. Smart consumers examine their expenses on a monthly basis to find mistakes, find areas where money can be saved and to plan which purchases should be avoided the next month. When you examine your expenses you find the small places where the money is simply being drained from your bank account. An aware consumer always knows where the money is going, where it is coming from and has a plan to replenish their savings account. This allows out of control spending to be stopped before it has a chance to go on for a period of three to six months and turn into uncontrollable debt.
Pay your Credit card Balance in Full Each Month. When you repay the credit card balance in full each month, you can avoid the costly interest charges that come from carrying a balance each month. This can save the consumer up to twenty percent of the costs of their purchases, depending on the interest rate that has been extended to the consumer. Additional money can be saved when the consumer repays the item within the grace period, as no interest can accumulate on the account.
Establish A Savings Account. When you establish a savings account you can eliminate the unnecessary charges that are placed on the credit card each month. There are so many credit card users that accumulate charges for disposable items, putting themselves in potential debt for items that are not going to retain their value. A savings account trains the consumer to spend only what they can afford and save for larger items rather than placing it on a charge card.
Save Receipts. As an aware consumer, saving receipts allows you to see where the money has been spent. Examine the receipts on a daily, weekly or monthly basis – whichever adheres best to your schedule. When you examine receipts you can determine where money can be saved – while establishing short term future goals that can be adhered to save money and avoid debt.
Smart consumers think about the future, plan, and take the necessary precautions to avoid any debt that may surface. Stopping bad habits before they begin is an essential part of staying out of debt.