If you are reading this text it is because you may have already tangled up with the bills and know how hard it is to get into debt. The collection calls at any time of day, the difficulty of getting credit in the square and finally such an unpleasant feeling that makes you swear to your feet together that you’ll never fall for it again! But, behold, you settle your debts, and after a few months the finances are no longer there. Sounds familiar? Learn how not to get in debt again.For those who answered yes, do not feel guilty. Instead, think that if you got into debt before, it’s because something went wrong with your financial planning. So the time is to roll up your sleeves, plan yourself, and figure out what you can do to close your accounts this time. Here are 5 tips that will help you stay out of debt again.
1. Know how much you earn and how much you spend not getting in debt
It’s not a matter of being good or not in math. For most people, one of the biggest challenges in finance is understanding how small coffee spending turns into meaningful spending at the end of the month, or how the salary you were supposed to give for the whole month was cut short by the 15th.To come up with an answer, there’s no way: you have to record your income and expenses. If you have never done this before, our tip is to start with a monthly expense tracking spreadsheet in Excel (see our post on getting started). Another alternative is to bet on spending control apps like Organizze and Mobills. Be that as it may, the rule is clear: your revenues must always be greater than your expenses.
2. Have an emergency reserve not to get in debt
Spending less than you earn is critical, but not enough to keep your bills up to date. In addition, it is also very important to have an emergency contingency reserve and not get in debt again. After all, what if someone in your house loses their job, for example?According to experts, the amount of emergency reserve should be equivalent to your basic expenses for a period of 6 months. To add this amount, use the spend sheet, which will help you see how much is left in your account each month, as well as to identify where you can “wipe” expenses. Ideally, stipulate how much you can save each month and set aside that amount as soon as your salary falls into account.
3. Research Investment Options
Where to save the emergency reserve money? Savings, of course, are always an option. But if you want to make your money pay more, you might want to look for other forms of investment. In the case of emergency reserve, a good alternative is to invest in Selic Treasury. With income greater than savings, it can also be withdrawn at any time, is tax exempt and allows you to make monthly deposits so you don’t get indebted.When choosing an investment, consider three main factors: yield (how much you get for the investment), risk (the likelihood that the return will be less than the amount invested) and liquidity (the ease with which you can withdraw your money). Research alternatives and make separate investments for different situations!
4. Make plans for using money
Have you ever stopped to think that money is not a purpose but a means? In other words, we usually don’t want to make money just for the sake of it. Our goal is to put dreams into practice, live new experiences, among other good things that money brings. This is why it is so important to have definite savings plans so as not to get in debt.After all, if I don’t know what I want to do with money in the future, what is the point of not buying a new outfit or having a beer with friends at the present? So put your dreams on paper and calculate the value needed to make each one come true. Then determine how much of your salary you will allocate to them, thinking about the time it will take to reach the full amount.Remember that goals don’t have to be dramatic or long term. They can be as simple as saving for a weekend on the beach or buying a new appliance.
5. Think about how you can increase your earnings so you don’t get in debt.
When talking about how not to get into debt, it is normal that the first recommendation is to save, because this way, you only work with what you already have. But what about when you’ve already wiped out all your expenses, sacrificed leisure time, and still can’t make an emergency reservation?In this case, the only way out is to look for ways to increase income. You can look for a placement in another company, try a promotion, participate in free courses that can add value to your resume, start selling a product, etc. Here on Pay First Credit’s blog, you will find several tips on how to earn extra money.Lastly, if you have your own business, getting a good loan can be very useful for investing in modernizing your business and thus increasing your revenue in the long run. In addition to finding an advantageous credit option, the key to success is to know very well what you want to do with the loan money and how much it can bring back. Enjoy that you are on our platform and order now a loan here not to get in debt again.
For those who think “I’m in debt” and soon feel a cold sweat, our first tip is to stay calm. Debts are synonymous with despair, but we explain that you can renegotiate them and get out of the red.No one is immune from making some debts. However organized you may be, there may be a slip here, an overspending there and that’s it: you’re already in debt. If you can repay these debts very quickly, do not hesitate to do so. But otherwise it is possible that they only increase, increase, increase … So, what to do?No need to be desperate! A beautiful and widely used alternative is debt renegotiation. With a few tips, you can take a breath and better organize yourself to get out of debt.
Are you in debt? Get organized!
Before making any decision, you need to know: How much do you owe? Separate your paper, pen, or Excel spreadsheet and start recording absolutely all your debts, however small. That way you can get an overview of what the situation is and move on to resolution.Still in this flow of spreadsheets, take a look at your monthly budget. We teach how to make one here, take a look. So you also have a sense of how much of your income can be used – or not – in the discharge process.
Setting priorities is very important not to get lost in which debts to pay off first. If you have a choice, choose those that are tied to the house or car – so you don’t risk losing those staples to the bank.Choose your strategy and clear all your doubts. When it comes to negotiating, it is worth asking everything: if cash is discounted, how much interest will be added if the amount is paid in installments, how long the situation will be settled, if you receive a letter of discharge. It is important to make everything very explicit so that there is no communication noise later.Set aside a portion of your income for these payments, but not much. In desperation to get out of debt, we may end up making new ones and getting into a snowball. Ideally, this should amount to a maximum of 30% of net income – more than that can hurt your budget.
Avoid seeking easy credit and falling for scams
In desperation, we may end up resorting to so-called miracle alternatives, such as easy credit or products that promise to help you. Be very careful! These options may have implicit rates that will hinder you more than solve your problems. You better get organized and try to stop being in debt with larger installments than resort to immediate solutions. Be aware that some lenders renegotiate up to 80% of your debt, so no hasty decisions.That said, also pay attention to discounts. Always pursuing the lower values is excellent, but it is better to pay a higher value if the discharge time is shorter. The idea is to get rid of it as quickly as possible and without spending too much on debt.
After all the alternatives you are still unable to pay off your debts, consider getting a loan.
It is an alternative that also involves expenses, but with lower interest and more affordable rates. It’s preferable to swap that bunch of interest, fees, and huge fines for smaller loan amounts.
Are you in debt? Astro Finance helps you!
If you don’t know what type of loan to apply for, come talk to us! Astro Finance specializes in finding the loan that best fits your needs, and the best is that it’s free. A good thing to be reading, isn’t it? Negotiate your debts and get out of the red: This is the first step to investing in healthy financial stability.