Nobody plans on getting into debt but it happens to a lot of us. Once you’re in debt, it’s so hard to get out of so you want to avoid it where possible. In some cases, people get into debt because they’re reckless with their spending and they start borrowing money for things they don’t need. They don’t realise they’re doing it at the time and before they know it, it’s too late. If you’re going to avoid getting into debt in the first place, you need to know the most common reasons that it happens to people.

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Unexpected Bills

This is one of the easiest ways to land yourself in financial trouble. If you get hit with a bill out of nowhere and you don’t have the money to pay it back, you might end up borrowing money to cover it. But that should be a last resort option. First off, you should be putting money into an emergency fund every month so when this does happen, you have the money there to pay that bill right away. Even if you don’t have an emergency fund, you shouldn’t resort to borrowing right away. The first thing you should do is challenge the bill because there’s always the chance that it might be wrong. If it is correct and you owe the money, ask them for an extension so you’ve got a bit of time to get the money together. A lot of companies are more accommodating than you think.

Low Earnings

If you don’t earn enough to cover all of your monthly bills, borrowing money is inevitable. But that doesn’t help the situation because you’re just adding another payment onto the pile. That’s how you become reliant on credit cards to get by and get stuck in a cycle of debt. If you’re going to avoid getting into debt then you need to find a way to earn more money. Getting a new job or asking for a raise is the obvious choice but that’s not always possible. If you’re struggling to get by, there are plenty of quick ways to make money on the side. If you can spend your evenings earning a little extra cash by filling out surveys online or driving a cab, you can avoid having to borrow money and getting yourself into debt. However, this is only a short term solution while you find a better way to earn more cash.

Holidays

Christmas is a time for friends and family but it also involves spending a lot of money. Sometimes, people go overboard and end up spending way more than they need to during the holidays. But the money isn’t the most important thing and you can still have a great time without maxing out your credit cards. Why not consider having a debt free Christmas this year instead? Your friends and family will still be grateful to you either way, you don’t have to spend loads of money on them to show them that you care.

Now that you’re aware of how people get into debt in the first place, you can avoid it a lot easier.

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It’s almost that time again already, and that usually means that your bank account is quivering in fear as it knows that it’s going to have to cash out an awful lot of money this year. You see, every new year that passes, we tell ourselves how we’ll do things differently this time around so that you don’t have to spend so much money over the Christmas time and be forced to scrape by for the following months. It’s a time that should be enjoyed with all of your favourite people, as a pose to worrying about what to buy.

Having said that, there is no reason that you should miss out on doing whatever you want to do this year, it simply comes down to thinking ahead and managing your money better.

Here’s what you need to be thinking about.   

Shop in advance

If you think about Christmas gifts a lot sooner rather than later, then you will not only be relieving yourself from a lot of stress towards the end of the year, but you’ll also be saving a lot more money too. This is because items and products prices go really high once the holidays set in, because stores and businesses know that this is when people are most likely to buy things on impulse, meaning more money for them. So all you need to do is outsmart them by getting most of your Christmas shopping done in the Summer, so by the time the season changes and people start to get that Christmas spirit – you already have your gifts boxed up and labelled.

Lower your interest rates

If you’ve taken out a loan in order to ensure that you have enough money over the Christmas period, then one thing that you’ll want to keep an eye on, is just how much the interest rates are costing you, as these are what determine how much you’re essentially able to save depending on how high the rates are. In some cases, you will be able to see how to lower credit card interest rate so you end up paying back less, rather than more. This can happen for many different reasons depending on who you’re with, but in most instances, it will be because they want to keep you as a customer. So do your research and see what you’re entitled to.

Pick up some extra shifts

If your work allows it, mention to your boss that you’d like to do some extra shifts or hours if and when possible, that way when there is a chance, you will be first in line. If you don’t have this option, then you can always think about picking up a part-time job in the evenings or on the weekends. This may feel like the last thing you want to be doing, but just think how much further all that extra money could go. Sometimes you have to do things you don’t particularly like in order to do the things that you love.

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Debt is one of the most stressful predicaments we can ever get involved with in our life. But a lot of people believe that, to solve their problems, they run away. But is this actually possible when we struggle with debt, and if it’s not, what can we do to face up to our demons?

The Changing Address Routine

If you’ve ever moved into a rental property you will know the scenario pretty well. You keep getting letters for a previous tenant, demanding that the outstanding balance is paid up, and when you explain that you have nothing to do with these people, it partially sorts itself out. But if you ever think his is a very simple way to escape debt, this isn’t going to give you much respite for long. Moving house is something you can do to escape an outstanding balance, but as soon as you register with the council, or put your name to any of the bills, which are legal requirements, you will have letters and phone calls harassing you.

Dealing With Money Worries Proactively

Instead, you can learn how to negotiate with debt collectors through an abundance of options. When you have mounting debt, and this greatly impacts your life, liaising directly with the creditors is the best way to come to some form of compromise. But we don’t seem to think about this at the outset, because these letters that demand we pay an outstanding balance in the next 5 to 7 days incredibly intimidating. It’s hardly a surprise that we shy away from these or don’t even open the envelopes. But when you are faced with an outstanding balance, and you are physically struggling to make the whole payment, it’s best to get in contact with them directly and to arrange a payment plan. Many utility providers can work with you to negotiate something that benefits both sides. After all, if you are unable to pay anything right now, but you are in the near future, this benefits them to get some money instead of none at all.

Struggling With The Stress

Money worries are crippling, and we can sit at home, afraid to put the heating on, because we are that poor. If you feel like this, running away from your financial stress is not the solution. And while we can feel limited in our financial capacity to do things that we enjoy, or perhaps we don’t feel that we can do anything because it costs money, this is when we have to focus on our health. There are numerous resources to help you cope in these circumstances, not least places like Citizens Advice where you can get some basic information, but when the stress of the situation threatens to undermine your happiness, running away from the problem will not provide the solution. Facing your money worries isn’t just about liaising with the creditors, but it’s about putting a solid plan in place, and this is what will help you regain some form of control, not just over your finances, but over your life.