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7 Ways to Avoid going into Debt and Staying Financially Free

These days millions of people have some kind of debt hanging over their heads, and it’s important that you know how to remain financially free. Getting into debt is far too easy, which is why you will need to learn as much as possible about how to stay out of it entirely. If you want to stay out of debt entirely, you will need to keep the following things in mind always.

1. Give yourself Permission to Spend (but not too much)

If you have done a good job of reigning your spending in over the years, you should give yourself permission to spend and splurge once in a while, but within reason. It’s important that you do not go overboard with your spending, because doing so can easily turn into a habit that’s difficult to break. There is nothing wrong with loosening up your budget a little bit, but you’ll always want to be reasonable about it.

2. Pay for things with Cash as much as Possible

When it comes to buying things like clothes, electronics and just about everything else, it’s a good idea to spend with cash if you can. It’s absolutely not a good idea to get into the habit of putting things on a credit card, because doing so could easily get you into trouble later on. Most people with crushing credit card debt didn’t think that using their plastic to buy things was an issue at some point. By spending with cash you will be able to minimize the risk of credit card debt.

3. Always Plan your Spending

It’s crucial that you always plan out what you are going to spend your money on and how much you’re going to spend. When you take the time to plan this out, you will have a much easier time staying out of debt. By planning your spending out you will be able to avoid splurging and spending money that you cannot really afford to spend. If you have your eye on a new flat screen TV or something really big like a Caribbean cruise, plan it out and save up the money. While you might not get the instant gratification that you would from charging the item on your card, doing so will help you stay out of debt rather effectively.

4. Identify your Spending Triggers

The next thing that you will need to do in order to stay out of debt is to identify the things that you cannot seem to help but spend your money on. Whether it’s clothes, electronics or something else, make sure that you avoid these things in stores when you don’t have the money. It’s simply too easy to give into your impulses when you are window shopping, so you will definitely need to keep this in mind for the future. The less you tempt yourself, the better your chances are going to be of staying out of debt.

5. Save Your Extra Money

When you have paid of all of yours debts, take the money that you have left over and put it into your savings account. The more money you manage to save, the less you will have to worry about big expenses coming up. The fact is that financial emergencies happen to everyone eventually, so you will need to make sure that you have the money to cover them. Every penny you put into your savings will go towards providing you with financial insurance and peace of mind.

6. Develop a Support Group of Frugal Friends

It’s always easier to stay on track financially when you have a support system around you. Make a point of surrounding yourself with people who are likely you when it comes to matters of finance. It’s very easy to get into debt when all of the people around you are spending like crazy.

7. Always Remember how terrible being in Debt Feels

If you are looking for a very effective way to stay out of debt, always remember how terrible it feels to be in this type of situation. A lot of people forget how horrible being in debt is once they have gotten out, but you will need to remember that feeling every time you are tempted to splurge on something you don’t really need.

Secured Loans vs. Unsecured Loans: What you need to know

Sometimes it can be difficult to decide whether you should take out a secured loan or an unsecured loan when you need to borrow money. No matter what the reason for your loan may be, it is crucial that you know the difference between these two types of loans before making a final decision of any kind. The more information you get on these loans, the better of a choice you will be able to make.

What is a Secured Loan?

A secured loan is simply a type of loan that requires that you put down some sort of collateral in the event that you cannot pay back the money you borrow in full and on time. This collateral must be something of significant value, such as your vehicle or even home. If you do not end up paying back the loan, the property that you put up as collateral will be taken to pay it back.

It is extremely important that you are very confident of your ability to pay back a secured loan, because otherwise you might risk losing your car or your home. The last thing you want to do is to default on one of these loans, as it might end up costing you a lot. Take the time to crunch the numbers to find out if you can realistically pay back one of these loans.

One of the worst situations that you could find yourself in is defaulting on the loan you take out, having your property repossessed, and then still owing the money you borrowed. If the property that you have put up for collateral doesn’t end up selling for enough to cover the amount of the loan, you could still owe a portion.

What is an Secured Loan?

An unsecured loan is a type of loan that does not require that you put up any property as collateral. This type of loan isn’t tied to any of your assets, and the lender will not be able to seize your property in order to pay back the loan if you default on it for any reason. While a secured loan might seem like a great overall deal, there are some things that you will need to know about them before applying.

In order to qualify for an secured loan, you will need to have great credit. Those with a very low credit score are usually rejected for secured loans. Because you don’t have to put up any of your assets as collateral if you do not pay back the loan, the lender only has your credit to go off of when determining how much of a liability you are.

Another thing to consider about secured loans is the fact that they typically come with fairly high interest rates. If you do end up getting approved for one of these loans, you can expect to pay quite a bit of interest. The interest rate that you pay for your loan will depend on a few different factors, including where you live and what your credit is like.

Credit Reporting

Lenders usually run an applicant’s credit for both secured and unsecured loans. Your credit won’t be as much of a factor in determining your eligibility for a secured loan, though it can still matter to a certain extent. Getting a secured loan is very contingent upon your credit score, so you will need to remember that when applying. Whichever type of loan you decide to apply for, you will want to make a point of finding out what your credit score is beforehand.

Which type of loan should you choose?

Only you can ultimately decide which type of loan to go with, but it’s important to carefully consider all of the information given above. If you really don’t want to risk your car or home getting repossessed, a secured loan might not be the way to go. An unsecured loan is a good option for those with good credit, though the interest you end up paying might not be worth it. Make sure that you factor all of these things into your final decision so you don’t end up with any regrets.

7 Simple Ways to Boost your Credit Score

There are some surprisingly simple ways that you can begin improving your credit score right away, and it’s very important that you know what they are. The more time you take to look into these methods, the better your chances will be of improving your credit score in a big way. The better your credit score is, the more doors you will open for yourself in life.

1. Keep a close eye on your credit card balances

One of the best ways to go about improving your credit score and making sure it doesn’t get any worse is to keep a close eye on the balance of your credit cards. One of the biggest factors in determining your credit score is how much revolving credit you have as opposed to how much you are actually using. The smaller the percentage is, the better your credit rating will likely be. You want to shoot for 30% or lower. Even if you manage to pay your balances in full each month, you could still potentially have a higher utilization ratio than you might think.

2. Take care of all your credit card balances

Another thing that you will absolutely need to do when it comes to getting your credit score up is to take care of those pesky credit card balances. Start working on paying off any outstanding balances you have, because they are only going to prevent your credit score from going up in the future. One of the factors that determines what your credit score is like is how many credit card balances you have, and how much you still owe. The best thing you can do is to start taking care of these balances right away. In the end you will be very glad you decided to do this.

3. Leave Old Debt on your Report

While you may be tempted to fight to get negative items taken off your credit report after you have paid them off, this could actually be a bad idea. There is no doubt that negative items are bad for your credit, but most of them will go away within a period of seven years. There is also what is known as “good debt,” which is the debt you have handled well and paid off as agreed. The longer your history of good debt is, the better your score is going to be. Remember, leaving old debt and good account on your credit report as long as possible.

4. Make good use of your Calendar

If you happen to be looking for a home or auto loan, you should really do your rate shopping within a fairly short period of time. It’s also important to keep in mind that your credit score is negatively affected each time you apply for a line or credit, even if it is in a small way. The overall length of the shopping period will depend on the credit score that is being used.

5. Pay all of your Bills on time

If you really want to boost your credit score over time, the best thing that you can do is to simply pay off all your bills on time. This will reflect very positively on your credit report, so you will need to keep this in mind. When you are late paying your bills, it will reflect poorly on your credit report. Those who want to boost their overall score considerably will need to pay off their bills on time on a consistent basis. The better you are at doing this, the less you’ll have to struggle to maintain a healthy credit score.

6. Remember that sometimes Inaction is the Key

Sometimes it is what you don’t do that can actually improve your credit score. For instance, charging more than you normally do to your credit card can have a negative impact on your score as a whole. Remember that sudden changes in your credit behavior can lead to bad things in the near future.

7. Do not become Obsessed

It can be easy to get obsessed about your credit score, especially considering how important it is, but it’s important that you avoid doing this. As long as you keep all of these things in mind, you shouldn’t have any problems. Constantly worrying about your credit score is simply no way to live.