A lot of us are feeding from hand to mouth. Many people find themselves drowning in debt at some point in their lives. They remain like that for the longest and as a result they end up being trapped in poverty. Some of these people get debts from loan sharks and they have to pay very or extremely high interest rates.
Getting such kind of loans may seem like a relief and a solution to whatever problem that needs money but it is a trap. Those people that take loans from loan sharks are seen as investments and these people actually know that you cannot pay that money back in time. That is to their advantage because they will make sure they get something from you every now and then.
Well, nobody wants to be in debt but circumstances push us into borrowing money that we don’t even know how we are going to pay it back. Again, you can sink in debt from a normal bank loan if things take a twist and don’t go as you planned after taking a loan. You may get a car loan and then you lose your job before you are done paying up the loan. The creditors will not understand that, all they need is their money.
How can we avoid being trapped in debt or being completely broke?
Avoid spending more than you earn. Spending more than you earn will leave you in debt. Once you are in it then you will earn money that you have spent already and it becomes a cycle. You only need to focus on what you can afford. Simply make sure you have the basics and put wants aside until you can afford. Avoid competing with other people and stop pretending to be who and what you are not.
Draft or draw a budget for yourself. You know an estimate of how much you can earn per month and allocate certain amounts on things that are on your budget. Cover up all your bills, calculate your expenses and see how much you are left with. From the surplus you should try to save something. Savings may be of great help in times of distress. But, you may need to budget for emergencies too.
If you can, get insurance for your possessions like cellphones and cars, do it. It may seem like a waste of money but with proper education about insurance, you can realize that it is very important and helpful. You will only discover the importance of an insurance policy when you get into problems like damages to your car or losing your gadgets.
Try to create multiple streams of income. Try not to rely on one source of income. This will help you create a stable financial base. Invest some of your money. Make contributions to your retirement fund.
Last but not least, have self-discipline. Stick to your budget and plans. Avoid impulse buying and be true to yourself. Learn to make sound financial decisions. Consider the future when making plans for the now.
Cheers!