Don't Let Credit and Debt Rule Your Life
Don't let credit and debt rule your life; follow these tips to keep your financial independence and avoid personal indebtedness.
Excessive indebtedness is a serious problem in the industrial world. People accumulating debt will wake up one day realizing that the main reason they are working is to pay for consumer goods they already own. At this stage, the person becomes a slave of their goods, has no control over their life and can't make good career choices; credit dictates their life and they can never stop working, even for just a few weeks.
Personal indebtedness as well as household indebtedness is in part linked to the fact that consumers are not purchasing goods, but payments. Consumers search for ways to fit a payment in their budget, without questioning the total cost and the long term consequences of such a decision. An accumulation of payments forces an individual to have a constant flow of income without having any possibility of skipping weekly pay.
Other than mortgages and a car, there are few reasons to get into debt when making a purchase. Multiple credit cards are a big problem for that matter. Too often, credits cards are changing from a tool to facilitate transaction to a tool for financing, which is absurd considering an interest rate at 20% or more!
Taking control over your personal finance also means taking control of your life. When you liberate yourself from the obligation of constantly generating income, you will make a better career choice and be happier. In addition, the less you get into debt, the easier it will be to make your payments and the better your credit rating will be. A good financial health and credit report will attract lower interest rates, which is important when you negotiate for your mortgage. Entering into the vicious cycle of excessive indebtedness will only cancel this advantage.
To begin with, one credit card is more than enough to fulfill your needs. That way, a person keeps a better control of their expenses. If you think that one credit card is too little to build a good credit, think again, you can get an excellent credit score with only one credit card with a limit of 500$ that you pay regularly on time. Here are a few tips to help you master your finances and get closer to financial independence:
- Make a cash flow budget every week
- Spend less than you gain (exercise self-restraint!)
- Pay cash
- Avoid purchasing products with monthly payments
- Save money before buying instead of financing a purchase with interest rates
- Keep one credit card as a transaction tool
- If you are already in heavy debt, pay your balance with the highest interest rate first and consolidate everything else in a lower interest account
You will be surprised how much getting control of your finance gives you the freedom to make better choices in life.
