Practical Debt Prevention Methods

debt management

Credit: LendingMemo

Staying out of debt in the 21st century is almost impossible. While the Chancellor, George Osborne, boasts that the UK is out of recession and its economy is growing faster than its other European counterparts, the vast majority of hardworking, normal people in the UK still feel like they’re earning the same as they were before the recession struck.

Ultimately, this means that if you feel like you’re the only one who’s having money problems, you’re not. It’s more than likely that many of your friends and family feel the same way that you do, and once you know that the trick is to be proactive about your debt. With some preventative measures, you can keep yourself out of the red and in the black. Just follow our practical debt prevention methods, and you’ll remain in the financial clear.

Saving on a Shoestring

When you don’t have a lot of money to begin with, it’s hard to imagine how you’re going to get the money together to be able to save something each month. However, with careful money management tips and strategies, you’ll be able to keep a small amount each month that will represent some savings.

The best ways to save are the old fashioned ones because they’re the most straightforward and easy to implement. Nicknamed the “jam jar” method of saving, take some envelopes (your jam jars) and allow each one to represent an element of your monthly outgoings (i.e. phone contract, entertainment subscription fees, utility bills etc.), and then also have one for savings.

At the beginning of each month, ensure that you draw out the money necessary to fulfill your financial obligations, as well as drawing out a set amount for your savings. With your jam jars filled, the money left in the bank is all you’re allowed to spend.

Consolidation and Money Management

Next, in an effort to ensure you’ve got as much money left at the end of the month as you can, you should consolidate and analyze your existing outgoings. For the first part of this, it could mean taking out a loan that takes all of your existing debt and converts it into a more manageable single monthly repayment. The second part is likely to be more time consuming, but worth it in the long run.

Essentially, you need to go through each and every one of your existing monthly direct debits to ensure that you’re getting the best for your money. Is your internet TV subscription deal the best it possibly could be? Is your phone contract as low as it could be? For more advice on how to manage your existing debts, read this handy guide from Different Money.

Investing in Your Future

Finally, it’s essential to realise that your personal finances can’t be secured overnight, and the best defense against debt is an active offence. To go on the offensive, financially speaking, means getting your head around investment. The simplest way to invest is in property. So whether that’s purchasing your first home, or taking out a second mortgage on a property that you plan on renting out, property is a good way of guaranteeing that you’ll have income coming in in the future that can help you defend against personal debt.

Of course, all forms of investment are inherently risky, so if you are investing, ensure you know how to minimize the risk as best you can.

Ultimately then, although the UK economy marches onwards, normal people like you are being swept under the rug. This means you’re going to have to take extra preventative measures – like the ones above – to keep yourself in the black and out of the red. Follow the above advice in this article, and you give yourself a good chance of staying afloat.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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