Everyday Actions to Keep You On Track
This week we are wrapping up our series on debt reduction by discussing how to avoid falling back into debt. Here are 4 strategies that you can use to help yourself live a debt-free life.
You have a budget, now stick to it
As part of your debt reduction strategy you reduced or eliminated spending on money on luxury items like fancy lattes and eating meals out. Keep to this budget so you can avoid overspending in the future, and always know exactly how much money you have coming in versus going out. The key to remaining debt free is to always ensure that you are earning more money each month than you are spending.
Treat your credit card like a debit card
Avoid using your credit card if at all possible. However, some things like online purchases can only be paid for using a credit card. In those cases treat your credit card as an extension of your bank account. If you don’t have the money in your account to cover the purchase then don’t buy it. If you do have to use your credit card pay off the balance right away so you aren’t charged interest. Most banks offer mobile banking apps that make it easy to pay off your credit card as soon as you use it.
Save for a rainy day
Take the money you had been using every month to pay down your debts and put it in a savings account, or split it between you savings account and your RRSP. This money can now be used to help fund your retirement and to cover unexpected or large costs like car repairs or medical bills. This can avoid putting you back into debt when your finances experience unexpected strain.
Treat yourself once in awhile
Being debt free doesn’t mean resigning yourself to frugal misery. Include a provision in your budget so that you can indulge in those little luxuries once in awhile. By going out for a date night or grabbing the occasional coffee with friends you won’t feel like your new budget is too restrictive or draconian. This will help you avoid derailing under the pressure and spending money you don’t have on things you don’t need.
To help you create a solid financial plan for your future call Tim Lacroix today at 403.648.1541 to book your free, one hour Financial Planning consultation.