It’s easy for debt to spiral out of control if you are not careful. One late bill can end up with huge interest that you can’t afford to pay, and then you end up getting bad credit which can affect you for years to come. They take your credit into account when you apply for a mortgage and a car loan. Therefore, you need to take charge of your finances so you can keep in a good financial state. Here are eight sure-fire ways to ensure you stay out of debt so that you have a good credit history.
Stay away from store cards
One sure-fire way to ensure you stay out of debt to keep good credit history is to stay away from store cards. It can sound appealing when you are in store, and they offer you a card with a great discount off your purchase today. However, if you start putting items on a store card, you will eventually have to pay it off when you might not be able to afford to. The interest can be high if you delay paying it back, and you might end up spending twice what the item originally cost! Therefore, only buy items you can afford that day, and save up for any non-essential items so that you can treat yourself another day!
Make sure you can afford a loan
Another sure-fire way to ensure you stay out of debt and keep a good credit history is to ensure you can afford loans you take out. You need to seriously consider how you will make the payments, and whether you can afford to pay them on a long-term basis. If you do want to get a loan, you should get an installment loan, so that it’s smaller amounts to pay back every month. Payday loans can often be too much pressure, and if you don’t pay back within the time, it can easily get you into debt. Therefore, you should look for an installment loan, so it’s a longer repayment period. You can find many loan companies online such as PersonalMoneyStore.com, which will enable you to pay out in installments over a set time.
Always consider the future
You can ensure you stay out of debt and keep a good credit history, by always considering the future when making a purchase. If you are planning to make a large purchase in the next year or two, you should think about whether you will be able to afford it if you do buy the item. You should consider what exactly you want to be doing in the next couple of years, so you know whether you are making the right decision. By thinking realistically about whether an item is a necessity, you are less likely to make a bad mistake, and end up getting yourself into debt.
Get a savings account for a bad day
Another sure-fire way to ensure you stay out of debt and keep a good credit history is by getting a savings account. Even if you can put a little bit of money in there every month, it will build up over time. Having a savings account is essential as it will bail you out if you are struggling to afford bills. You can take money out of there, and then you won’t have to worry about getting into debt. Make sure you research the different ones available so you know you are getting the best interest rates on your money. And remember if you do take money out of there, you must vow to try and put the money back in there so it’s available for a bad day!
Always have insurance in case something goes wrong
You can also ensure you stay out of debt and keep a good credit history by always having insurance in case something goes wrong. You don’t want a problem with your home, and you end up getting yourself in debt, as you had no insurance. You need to ensure you have in place health insurance if you do get ill and can’t afford to work. It will help you to cover the bills till you are well enough again. As this feature explains, it may feel like an expensive addition to your bills every month, but if you do have an issue, you will really need it!
Keep on top of card and online payments
Another sure-fire way to ensure you stay out of debt and keep a good credit history is to keep on top of your outgoing payments. If you are making purchases by your card or online, it can be easy to lose track of what you have been spending. You need always to print off any receipts for payments online so you can keep a record of them. Ask for receipts in store when using your card, so you know how much you have spent. As talked about on this site, you could always set up direct-debit payments for your bill, and then withdraw your spending money. That way, you know all your vital bills are being paid for, and how much you have left to spend for the month on non-essentials!
Pay back credit cards straight away
You can also ensure you stay out of debt and keep a good credit history by making sure you pay back credit cards straight away. The longer you leave the payments, the more you will have to payback. You should always try and pay it back in 30 days, so you don’t get yourself into debt. Don’t put any long-term bills on there, as you could end up paying a lot of interest. Always use any credit cards responsibly to stay debt-free.
If you feel like you can’t handle your finances yourself, you could always look into hiring an accountant to take care of them. That way, you will be able to know you aren’t going to get yourself into trouble with money. And if you do manage to get yourself into debt, here are some tips to deal with it so you can be debt-free before long!