How to Stay out of Debt: 5 Personal Finance Tips
by Kelly
1. Spend Less Than You Make. While this seems pretty basic, it’s the most important step to avoiding debt. If you live within your means, you have a “surplus” of money that you can put in savings. Over time you can buy a car, afford a house, or at least have good credit.
2. Rent, Don’t Buy*. At least in the current economy, renting saves money and allows for you to accumulate savings. Mortgage fees are particularly high during this housing slump and borrowing massive amounts of money to pay for a house isn’t exactly the best way to avoid debt. Here are two persuasive articles that explain this better than I can.
*This is advice for a housing slump like the one we are experiencing now. As with all investments, be smart and do your homework before making the plunge.
3. Impose a Shopping Ban. To help yourself curb spending, try setting limits on how much you can spend a week. Some, like Sal at Already Pretty, allow themselves to spend $10 a week on used clothing, but won’t buy anything new or expensive. Adjust your ban to your specific needs. Can you stick to an “only the essentials” ban? What are your limits and what can you live with?
Here is an extreme (but awesome) example of a shopping ban…this group pledged not to buy ANYTHING new for a year!
4. Don’t Use Credit Cards. Even though you promise yourself it’s only for necessities, the temptation to use a credit card for all your purchases can be hard to resist. It’s just a piece of plastic and it makes transactions seem more palatable than handing over a wad of your hard-earned cash. My advice is to use a debit card or write checks. That way you can’t spend money you don’t have, and you won’t get charged ridiculous interest.
5. Comparison Shop. Thanks to the internet, there really is no excuse not to comparison shop. Finding a potentially cheaper product is only a few clicks away. Yahoo shopping is pretty good for comparing prices. If you don’t want to buy online, it’s beneficial to do a little research before traveling to the store (although buying online saves gas and time). You can save a lot of money by doing this, especially when purchasing electronics or expensive items. Also, if you really want an item, but can’t afford it, check ebay to see if you can find it for significantly less.
Related Links:
Why Women Need Money More Than Men
Top 10 Reasons People Spend More Than They Earn
The Cost of Buying a Home Over 30 Years
Beginner Advice for Someone New to Personal Finance
Global Richlist (really, really eye-opening!!)
In the course of doing research for this post, I came across a few really great personal finance sites:
Money Under 30
Girls Just Wanna Have Funds
Poorer Than You
Have any finance tips of your own? Please share!
GREAT tips :)
So useful! So timely! When I was super broke and in grad school, I gave myself an ‘allowance’ for fun stuff and frippery and forced myself to really consider any purchase over $10. It really elevated my love for that $15 Clinique lipstick! :)
Good tips. Though it’s so hard to even live *to* your means when you’re making minimum wage and food prices are rising. Grawrh! [Insert your favorite expletive]
@ Miss Corrine — Thanks!
@ Sarah Von — I know what you mean. I get so many dresses off ebay for around $10, so I now consider a 40 dollar dress a splurge. It helps keep things in perspective.
@ Dollyann — Arrrghh you don’t wanna know how much I drop on groceries per month.
[...] Source [The Rotten Little Girls] Filed Under Banks, Consumers, Credit and Debit Cards, Debt [...]
Great advice! I’ve really cut back on my credit card use in the last couple of months. And (self-adulation ahead: You’ve been warned.) I totally rock the grocery store. I can usually get out of there for less than $80/week — feeding a family of four!
Menu planning is the key. Make a trip to the grocery store once a week and stick to your list. The more often you go, the more you spend.
Go veggie at least 2 meals a week. Use meat as an accent as much as possible, rather than the main player. And check those supermarket sale flyers! Stock up on non-perishables when stuff’s on sale, then you can plan future meals around what’s in your pantry.
There. I feel like I’ve contributed now. :)
@ Sonya — That is really good advice — I’m only shopping for one (or two, if you count the 5 times a week that my boyfriend eats dinner at my place) and I spend a lot of money. I’m going to start planning a menu, with veggies getting more emphasis (I love carbs too much).
Yes we should spend less than we earn and keep our budget carefully, if necessary we may use credit cards but should not use it too frequent.
Thanks, Dollface, for sharing these tips with your readers (and for linking to Consumerism Commentary).