Thanks to online shopping and quick credit card approvals, it’s easier than ever to get into debt. Unfortunately, once you get into debt, getting out becomes more difficult the longer you stay in the cycle.
If you’re trying to become debt-free, the first step you’ll need to take is figuring out a strategy for how to tackle your debt. There are several ways you can go about it, but try comparing the avalanche vs. snowball method of paying off debt. These methods are based on using your natural motivations to help you reach different debt milestones.
Once you’re out of debt, you’ll need to have a plan for how you’ll stay that way. Here are five effective methods you can use to ensure you’re never trapped under the weight of debt again.
Pay cash or use a debit card
Credit card companies will lure you into using their products with the promise of things like cash back, travel miles, or other offers. If you’re not disciplined enough with your finances, these offers can lead to a slippery slope that puts you into an overwhelming amount of debt.
You can avoid this altogether by storing your credit cards and instead only carrying a debit card or cash to pay for purchases. By removing the temptation of high credit lines, you’ll stop indulging on expensive things that you only bought because you could. Having a fixed amount of money available gives you a better chance of staying financially stable.
Keep track of your spending
To stay on top of your financial health, you’ll need to know where your money goes. Having access to data like this gives you a complete picture of how you spend money, what the critical bills are, and where the blind spots are that leak money from your budget. By being mindful of how money flows in and out of your life, you’ll be able to keep your spending at bay because you’ll know exactly how much you have available.
Understand your motivation to spend money
Retail therapy is a real thing that many use to help cope with difficult emotions or situations. To avoid getting into debt, you’ve got to know what your impulse triggers are and find new coping mechanisms to deal with them. Triggers could include stress, poor self-image or self-worth, boredom, insecurity, feeling like you need to keep up with your peers, depression, etc. Take a step back and look at what causes you to reach for that credit card. Is there another way you can soothe your pain without spiraling into debt?
Delete your saved payment methods from websites
Not only is it a security risk, but keeping your credit card or bank account numbers stored on an e-commerce site makes it too easy to click and buy. Online retailers make it as easy as possible to buy from them, so it’s up to you to add roadblocks that stop those impulse purchases from destroying your budget.
If you want to keep a stored payment method for convenience, consider buying a gift card for that website or using a prepaid debit card. That way, you’ll be forced to stick to a set limit for your purchases and will have to intentionally reload it, making you rethink the value behind what you’re buying.
Create a better savings goal
Too often, impulse purchases will be made because there’s nothing more desirable to put that money toward. If you can create a savings goal that outweighs your impulsivity, it could go a long way toward keeping you out of debt. Exciting goals like vacations, weddings, getting rid of debt, or buying a home or car can help you focus your efforts and avoid the temptation of buying things you don’t need.
Whenever you’re tempted to buy something, immediately put that money into the savings account that’s dedicated to whatever goal you’ve set for yourself.
The bottom line
Debt may be normal in our culture, but that doesn’t mean it’s necessary. Use a few of these strategies to help keep you out of the debt cycle and on your way to a higher quality of life.