Getting Debt – 20 Tips To Avoid

For debt management, beware these twenty ways to get into debt.

1. The big cause of debt

Your parents didn’t teach you how to manage money. They probably didn’t know themselves. Or they may have considered it was so obvious that they didn’t need to teach you.
Fortunate child learns about money management

My parents trained me with the traditional Scottish approach to getting the best value for money with no debt.

Your school didn’t teach you. That could be because banks finance schools, and banks don’t want you to handle debt well. Banks need customers with bad debt. Don’t worry; this site is your go-to for managing money. Take control. Stop being financially illiterate.

I remain debt free because I avoid number 2.

2. Not Saving Money

Escaping piggy bank cartoon
Don’t think this is unrealistic waffle. You’ll get there if you follow suggestions on this website.

I’m sorry, but emergencies WILL come. Always have enough savings for an unexpected demand. If not, you must keep a budget.

Don’t keep your money in the bank. A financial crash worse than the 2008 one is coming, and you might lose everything in your bank accounts. Keep only one or two thousand dollars in your savings account for convenience.

3. Not Sticking To Budget

I can’t write the whole website in one day. Advice about budgeting is coming. Meanwhile, you should Google “how to budget.”
Old fashioned bookkeeper
You should learn the basics of bookkeeping (see tip 1) then install the free program GnuCash. They have full instructions there but learn about double-entry bookkeeping beforehand. I keep two books with that program – one for home and one for business.

I think it has a budgeting section too but I can’t tell you about that because I just keep a mental budget.

In the old days, your pile of coins or cowrie shells told you when to trim your spending. But you can’t see your credit card debt. You need a more formal budget. I don’t keep a budget. I only have a debit card, not a credit card so I can only spend money that I have. With online banking it only takes a few seconds to see how much I still have. I aim to keep it at about two thousand dollars. If it falls below a thousand then I go into full miser mode. Easy.

4. Credit Cards

Scissors chop credit card
My advice is – have a debit card – not a credit card. I used a credit card for many years with no problems. The banks probably hated me, because I always paid near the end of the interest-free period. You wouldn’t visit this site if you could do that.

I find it difficult to believe … the average USA credit card debt exceeds $15000. Credit card interest is often over 20%. At that rate, it takes only four years to double your loan. Some charge over 30%.

5. Student Loans

Picture a student loan man-trap.
A student loan is the worst, most sneaky debt trap. I’ll write more soon.

6. Keeping Up With The Joneses

DON’T. The Joneses have high-stress lives, working more than fifty hours a week in the hope of being out of debt at the age of 65 when they are too old to enjoy it.

7. Mortgage

A mortgage is usually a terrible idea too. Did you know that you are likely to pay up to four times what the house is worth in interest and bank charges? I’ll write about avoiding mortgages too.

8. Reduced Income

A sudden income reduction increases all your debts. You lose your job for instance, and mortgages – school loans and debt management problems hit you.

9. Big-Spending Partner

Don’t have joint bank accounts. Financial problems can lead to divorce.

10. Divorce

You’ll need big savings for this.

11. Not Studying The Fine Print

Picture a magnifying glass studying fine print.
“No interest for five years” is NOT an opportunity. It’s a trap.

12. Growing Families

A couple has good jobs. You can easily pay your mortgage and student loans. Twins come. The wife stops earning. Debt, debt, debt.

13. Emergencies

Your water heater springs a leak. You need to buy a new one. The plumber’s bills are high. Or the Council doubles your rates. Perhaps you get sick.

14. Co-signing

You put yourself at the mercy of the person you are helping. If your child doesn’t pay off the student debt, you may be stuck with financial hardship all your life.

15. Lack Of Insurance And Gambling

Picture confidence trickster offering a sure thing.
You could win the gamble, or regret it for the rest of your life in first world countries. In some countries health visits are so cheap that you don’t need insurance.

16. Inflation

Rates, taxes, housing, food, and gas expenses all go up.

17. Identity Theft

Perhaps someone steals your identity and creates a bank account in your name. They will put you heavily in debt before you can get a refund.

18. Impossible Dreams or Impulse Buying

“If only I had ………………… [fill in a daydream] – my life would be perfect.” You buy on credit, but you don’t enjoy your purchase. And you still have to pay off your debt.

19. Spending an Expected Bonus

Don’t spend money before you cash the check. You may never receive what you are expecting.

20. Spending Money to Make Money

Only invest money that you can afford to lose.

I’ll eventually write more about how to avoid these 20 ways to get into debt and use good debt management. Meanwhile, if the debt collection agency is getting aggressive, learn what they are allowed to do legally. There are debt collection laws. They vary from country to country – this article is for the USA but there are probably similar laws in your country.


Get Debt Section of Site

  1. getting debt
    1. student loan

Please help me by leaving your comments, or suggestions, or questions below.

Please leave your tips, comments, or suggestions here so that I will know what to write in future. Use Google+ or Facebook or just the blog

Loading Facebook Comments ...

1 thought on “Getting Debt – 20 Tips To Avoid

  1. Why condemn yourself to a life of bad bargains. You can often get up to 20% discount if you ask “What is your best offer if I pay by cash?”
    Please tell me what you think. Ignore the asterisks – you don’t have to give your name and email, though I would like to know who is talking.

Leave a Comment