Financial planning is the first step; see others
Debts are a big problem for a large part of the population. According to a study by Max Capital Mex, nearly 77% of Mexicans already have one debt or more. The reasons are many: mismanagement of money, student loans, home or car financing, personal debt for health reasons, and any other unforeseen situation linked to the absence of money.
Once in this context, many people get desperate thinking about not only how to pay the bills and debts, but also about avoiding new debt. This problem is serious since it can impact personal life, love or family relationships, work, wellbeing and even the health of the indebted person.
The good news is that with some attitudes and new habits, it is possible to avoid new debts, pay off previous ones and develop a healthier relationship with money. In this article, learn what to do to avoid further worries of this kind.
The first rule about financial health is not spending more than you earn. In other words, that means you need to follow your monthly budget, trying your hardest to keep the expenditure smaller than the gains. Therefore, if you earn $3.000, your expenses cannot be bigger than that. It is necessary to organize your finances to discover how you are spending your money.
Since you know where your money is going, it is possible to know where to cut expenses. Many of the debts come from small expenses, like outings to restaurants, and purchases of clothes or other non-urgent items. If you manage to reduce expenses on this type of purchase, you will probably already have a financial breath, avoiding new debts.
This topic is deeply related to the previous one. A healthy financial life needs priorities, that is, situations to which you will direct your money first. The main expenses are housing, food, education, health, etc. After them, you can set other priorities, such as traveling, buying a car, taking a new professional course, visit a family member who lives abroad, among others.
With priorities set, it’s easier to be motivated to save that money. As that value already has a certain destination, you avoid using it in other purchases, generating new debts. In addition, setting priorities allows you to plan your future more carefully, helping to reduce the anxiety that lack of money can cause.
The credit card can be very useful at different moments, but it ends up being a villain for those who have a lot of debt. It conveys the feeling that the person has the money to pay, when often he or she will not receive that amount at the time of paying the bill.
Therefore, paying in cash is a great option to save your money and control your expenses. You can only spend the money you have, which can make you plan the expenditure more carefully.
Many financial institutions agree to reduce the amount of old debt or review the payment conditions. Perhaps negotiating an old debt will make it easier to manage finances and avoid new debts. Therefore, if you already have debt in your name, contact the bank or financial institution and check if it is possible to change the amount or payment terms.
Finally, another way to avoid getting into new debt is diversifying the sources of income. You can keep your formal job, for example, and get a freelancer occupation to get more money and, thus, obtain more control over your financial life. However, this option requires attention and organization; otherwise, you can get too tired and without free time to rest.