Avoid the Debt Trap

Debt has become such a normal notion that some people go into debt without thinking of their personal finance circumstances heavily. But debt is crippling. Here are ways to avoid the debt trap and enjoy your hard-earned money better.

First, don’t borrow to impress. Don’t even spend to impress. The better idea would be to save and spend on things that truly bring joy. If you are always tempted to borrow money or take out poor credit loans to keep up with the socialite neighbors, you are setting yourself up into debt that you probably can’t afford. Instead, borrow, save and spend for all the right reasons.

Second, should you borrow, do it responsibly. If you believe you need poor credit loans, it is first best to assess your financial situation. Will your income be able to accommodate the new loan payments? Will you be able to have wiggle room or do you need to tighten your belt for the time being? If you can answer these questions honestly and you know for a fact that you can afford poor credit loans, then you won’t get into debt trap. You just need to make sure beforehand that you can afford the poor credit loans. Otherwise, think of better and safer alternatives.

It is also good to be financially prepared for emergencies. Having an amount dedicated solely for emergencies afford you a level of peace and comfort that you can face anything without stressing out or panicking. When you’re emotionally charged with stress or panic, you are prone to making hasty decisions; decisions that could prove costly in the end. Having an emergency fund provides you the cushion without yet having to downgrade your lifestyle. Instead, it will give you the resources to rebuild what you lost and not have to suffer a detrimental financial blow.

If you don’t have the emergency fund in place yet, a good alternative would be poor credit loans. Going back to the first two reasons, you will realize that using poor credit loans to pay medical bills is not to impress, but rather to survive. Second, using poor credit loans on matters of survival is sensible and practical – and probably the best choice for certain situations.

It also helps to budget accordingly. There’s a risk of spending some good money into useless things without the guidance of a budget. And when you’re running out of money, you feel the urge to get into debt. In order to keep this thoughts at bay, budget your expenses accordingly so that all the basics are covered. If you have some extra money, use some for fun; others for building the emergency fund and some again for your nest egg.

Some people never get out of the debt trap because they don’t make the conscious effort to do so. They could still be taking poor credit loans for all the wrong reasons or they always fail to save even when they can. Getting out of debt trap is a conscious choice backed by solid actions. If you don’t will yourself to get out of there, chances are, you never will.