Many people are unable to control their home budget optimally if they ever have it. As a result of this mismanagement, their expenses exceed their income each month, they are not able to keep debts under control and they have no choice but to seek financing by borrowing even more.
Excessive indebtedness can lead to bankruptcy for both individuals and companies. But does this mean that the debts are bad? Not necessarily, because if it were not for them, many people could never buy a car or a house to live in.
Like everything in life, things are not only white or black, but there are also gray tones. Debts do not have to be bad. The important thing is to keep the debts under control.
Having debts under control is easy if you follow these tips
1º. Be mindful that you do not need to take out a loan or resort to any type of credit every time you want to buy something and do not have enough money in the bank to pay for it. Almost all purchases can wait a few months, enough time to save what they cost. The immediacy will only bring you problems.
2º. Make the firm decision to pay off the debts you have today. Remember that you can start with the most interesting, for the largest amount, for which you have more commissions or simply for that to which you have more mania.
3º. Make a list of all your monthly expenses. Keep in mind that some of these expenses are fixed every month while others increase or decrease depending on consumption (food, electricity …). Do not forget either that there are expenses that are repeated month by month (mortgage) while others are seasonal (home insurance).
4th Re-classify your expenses in three columns: “necessary to live”, “not necessary but that improve your quality of life” and “unnecessary and totally dispensable”. It optimizes those of the second group and eliminates those of the third. We’re going to sweep the house before we scrub it.
5th Plan the future of your expenses. Start with the daily expenses, such as the loaf of bread or coffee in the bar and keep pulling the rope: the payment of your insurance, your holidays, your training and even your retirement. Anticipate everyone. Do not let any expense catch you by surprise.
6th. Mentalize that things bought with debt are always much more expensive. For example, a 600-euro mobile phone could cost you more than 700 if you finance it for three or four years at an interest rate of 10%. And if the financing is with a credit card and establishes the minimum monthly payment as payment, the final amount could exceed 1,500 euros.
7th Commit yourself to lead a minimalist life. We are not going to ask you to limit your properties to only 100 things and that you give away all the others, but you should be losing the attachment to more than half of the things you have. Stay with the essentials and establish priorities. Less is more.
If you want your financial health to improve, put these seven tips into practice and keep debts under control. There is nothing worse than living tormented by them.