Steps to staying free of debt

Happy Loan Corp.Personal Finance

Steps to staying free of debt

The day you become free of all kinds of monetary debt is a day that will be etched in your memory for all life to come. Being free of debt in a world which is so economically challenging is a huge feat and achieving it is no meager task. However, staying in that position is the task that takes the highest amount of skills. You need to adopt certain skills in order to remain debt free and they have been enumerated below.

Building up a fund for emergencies

As soon as you become free of debt, the first thing that you should consider doing is building up a fund for emergencies. This will enable you to tackle situations that arise unexpectedly and help you have a solid monetary backbone to rely on, thereby keeping you out of the harrows of debt. Create a savings account and start putting in money in this account every month, like you did while paying off your debt. Instead of using your money to pay off debt, use it to be saved for an emergency fund that will come to use during a rainy day. This will stop you from relying on your credit cards and keep you away from accumulating debt.

Save for monumental purchases

A major reason why a lot of Canadians are facing debt is because they lack planning and do not save up for monumental purchases. They make these spending through credit cards or lines of credit, thereby accumulating their debt. A great way to avoid such a situation is to start saving for big expenses like vacations or buying of a new car or house beforehand. By saving up for these occasions from an earlier date, you avoid spending from your credit cards and thereby prohibit the accumulation of debt.

Try to live within the means that you have

Another important rule to avoid accumulating debt is to know your means and live within its bounds. Spending extravagantly and leading a lavish lifestyle while not having enough income to cope up with those fancies is a golden way to start accumulating debt. In order to avoid such situations try creating a budget and make sure that you stick to it.