How to Avoid Going in Debt

debtEveryone thinks that someone who makes a ton of money is financially rich, but sometimes you’d be surprised to hear that they really don’t have all that much money. For instance, I heard about this person that was a plastic surgeon and he had a ton of celebrities that he worked with. He had a very big practice, had a couple of mansions, vacation homes, his own private jet, a yacht, etc… One day, he called a friend of mine and asked my friend how he would go about declaring bankruptcy.

Of course, my friend was shocked to say that least and asked him how he could have all this stuff and end up going bankrupt. That’s when the plastic surgeon told him that even though he makes a lot of money, he also spends a lot of money, as well. He admitted that he spent a ton of money, but he never really looked at the bottom line. It was hard for the plastic surgeon to understand that even though he made millions of dollars that he couldn’t spend millions of dollars and remain wealthy.

The moral of this story is to always remember that it’s not about how much money you make, but it’s about how much money you save. It’s not always true that the rich will only get richer while the poor will get poorer. Rich people can overspend and end up going bankrupt. Also, people that aren’t rich can still save money and become financially independent. The key to this is spending less money than you make.

Below, I’m going to go over a few brief tips that will help you avoid going in debt.

#1. Save Money Consistently

This is one of the most important tips I’m going to give you. It’s very important that you make a plan to save money every single month and you stick to this plan. Too many people live from pay check to pay check and it’s not a wise way to live at all. There are always going to be expenses that pop up that you never saw coming. If you have money saved, you’ll have peace of mind in knowing that if anything pops up, you’re financially stable enough to manage the issue.

The best way to save money is to put a pre-determined amount of money off of every single pay check in your savings account. For instance, my husband and I always put 10% of pay checks in our savings account. We don’t put it in our checking account, because we might see all that money in there and be tempted to spend it.

#2. Go Over Your Statements

It’s important that you go over all of your bank statements, bills, credit card statements, etc… Check them all thoroughly, so you can see where all of your money is going every month. It’s important to see how much you’re overspending or how much you’re saving every month. Going over these statements will enable you to find areas where you may be able to save more money. For instance, you could be spending far too much money on fast food, so you’ll know to cut back.

#3. Bookmark This Website

It may sound corny, like I’m a car salesman, but you’ll be amazed at how much money we can save you. We’re always posting about the latest and greatest coupons and deals. Also, we do articles like these on a consistent basis that are geared towards helping our readers like you save as much money as possible.