Top 5 Finance Tips To Control Debt

It is always easier to end up spending more than you can afford, more so if you use credit cards. Surveys have shown that an average household in the US usually has a minimum debt of over $15,000 from credit cards and there has been a huge increase in the number of personal bankruptcy cases in the near future.

However, this doesn’t mean that you completely avoid debts by drawing from your cash reserves. What is required is a balanced spending plan so that you don’t end up in debt that you cannot repay.

Here are lists of things you can do to control your debt:

Control Debt

1. Control Your Spending

The first thing that you should do when you have debts is to monitor your spending. Cut down on shopping or vacations — things you don’t need and cannot afford. You usually pay for these with your credit card without thinking about the long run where you have to pay a huge interest on them. Make these expensive purchases by saving up for them instead of using the credit card.

2. Cut Down On The Usage Of Credit Cards

When people have a credit card in their possession they go ahead and buy expensive items which they wouldn’t usually buy. They feel that they can pay for it slowly in the future. This habit can be dangerous as it usually creates a debt crisis and may lead to bankruptcy. Credit cards have very high interest rates and it becomes difficult to pay up the amount that gets accumulated over time. You have to make a strong decision to stop yourself from making a purchase with a credit card. If you cannot pay for the expensive item without paying 100% of the amount upfront, do not buy it.

3. Stop Borrowing For Furnishers and Home Appliances

It is okay to borrow for a home or college, however borrowing for furnishers and home appliances are wrong. These items do not add to the value of the house and their value depreciates over time. Therefore if you borrow for an appliance like a microwave, you have to continue paying for it even if the item breaks down and has to be replaced with a new one. These items are best bought in cash.

4. Start Planning Your Expenses

You know how much you earn every month and how much cash you have in hand after tax deductions. Now if you start planning your expenses, noting down every cent you spend, you can determine how much of it is necessary and how much of it can be done away with. Sticking to a list while shopping and not buying anything apart from what is on that list will help you curb unnecessary expenses. Use the saved amount to pay your high interest debts.

5. Cut Down On Variable Spending and Use the Money for Debt Payment

When you write down each and every dollar you spend, it is easy to find out which is your fixed spending and which is your variable spending. The bus ride to office would be a fixed spending but the magazine you bought at lunch would be a variable spending. It could be easily done away with and in this manner you can find out how much money you can spend every month. Stop your variable spending once you have pinpointed them and use it to make your debt payments.

When you are paying your debts, check your credit report with the credit bureaus to avail a slash in interest rates and credit ratings.

This article has been provided by as part of their series on debt management. Logbook Loans 4U are a company dedicated to helping you find the best logbook loan.