Taking loans seems to be a common practice these days. You might even find that an individual will take a loan so as to pay another loan! So, is it possible to avoid loans in the first place? Read on to find out. The following are some of the steps that you may take so as to stay debt free:
Financial planning and management
It may sound like a broken record but it is true that when you fail to plan, you plan to fail. You need to record all your planned expenses and the available budget. This gives you an idea of what you have and what you can do with it. It keeps your spending habits on check so as to ensure that you do not spend beyond what you have at your disposal. Financial management can also help you multiply the resources that you have. By increasing the amount of money that you have through engaging in profitable businesses or investments with return, you are able to increase your cash flow and by extension, avoid the need to borrow loans. Also, by investing or saving some cash for unforeseen events, you will have this as extra resources that will be come in handy when you need some quick cash for an emergency. With this, you will not need to take a loan. If you already have several loans, you may want to read more about loan consolidation.
Live within your means
Now that you know what you have and what you may spare for savings or spending, do stick within the set limits. Live within your means and avoid spending money on things that you may not necessarily need. Your finances should be used so as to cater for you or your family and not to impress other people. Do not yearn to live out someone else’s lifestyle, yet you do not know the effort or lengths that they go to so as to maintain their lifestyle. Keeping up with the Jones’ is quite an expensive affair that will upgrade your lifestyle and appearance at the expense of your finances. Should you have to make a purchase of something that you need but cannot necessarily afford at that given time, settling for hire purchase options could help you purchase the item while avoiding the need to borrow a loan.
Try as much as possible to avoid using credit cards. You could even start out by not having one. This is because you will be tempted to start spending money that you do not have. This will lead to more indebtedness should you have to take up a loan so as to clear this amount when it is due.
Know when to say ‘No’
As we are social beings, we interact with family and friends. Often, these relations may come with financial obligations. As such, if you keep giving out cash for this and that yet you are still struggling to make ends meet, you will probably have a deficit. While we should be there for each other in times of need, you should also plan for your current and future needs. Do not let it be a case where you have to incur more expenses or take a loan so as to meet with people’s expectations.
It takes financial planning, discipline and management to avoid loans. It may not be easy, but it is possible. You will need to gain more financial knowledge and practice healthy financial habits so as to stay debt free. Avoiding loans will keep you worry free at night as well. Armed with this knowledge, do not sleep on it- get up and act on having a better financial life that does not include loans. It is better to strain and train yourself on financial management than to live out the pain of living on and spending what you do not have.