Useful Tips for Those Who Don’t Want to Live on Credit

Psychologists identify two common traits in the character of people who are prone to dependence on loans:

Financial illiteracy

This term hides a misunderstanding of how much money a person has, what exactly he spends it on, and why. A financially illiterate person does not understand the consequences of buying on credit. A person who has taken a loan may subsequently face a situation where he cannot make the next payment or pay the entire debt in full.

If, on the contrary, you are faced with a situation where you need to collect a debt, then it is better to immediately contact a lawyer. It does not matter in what country your debtor is—for example, even if he is hiding from you in the UAE, just hire a debt collector in Dubai. Talking without a lawyer to people who owe money is often useless. A lawyer will help you prepare the necessary documents and go to court. Also, a lawyer can, by agreement, present you in court.


Such people do not want to take responsibility for their lives into their own hands in any form. They are haunted by thoughts that someone should help them.

Part of being an adult is being responsible for your budget and not falling into either financial illiteracy or infantilism. If you don’t want to live on credit, this article will give you some tips that will help you take control of your money.

Useful Tips For Those Who Does Not Want To Live On Credit. Top photo by Towfiqu barbhuiya on Unsplash. Bottom photo by NORTHFOLK on Unsplash

Short-term budget planning

Family budget planning is carried out for one calendar month. Sit down at the beginning or end of every month to look at your income and expenses and ensure that you know where your money is coming from and going to. If major expenses are planned during the year (for example, repairs or vacations), then long-term budgeting can also be carried out. If you don’t want to live on credit, then it’s important to plan for the future and be honest about your income and expenses.

How to plan your budget:

  • Determine the total amount of income.
  • Determine the mandatory expenses that must be met. This includes expenses for food, utility bills, phone and internet, maintenance of a family car or public transport, etc. Don’t neglect personal spending such as clothing, hair cuts and eating out.
  • Set aside some money for savings, charity, and home maintenance.

Be aware of common mistakes:

  1. Only one family member manages money in the family. This is a common mistake of many couples, especially after the birth of a child. When a woman is on maternity leave and does not have her income, the husband may consider it necessary to manage the budget on his own. Or perhaps one spouse likes accounting and handling numbers and the other doesn’t, so one spouse knows about the family finances and the other has no clue. Even if one spouse is primarily responsible for the finances and details of the budget, both spouses should have regular conversations about the household money.
  2. There are no limits on personal needs or spontaneous purchases. For example, each of the spouses contributes to a common account, but sometimes one person makes unjustified expensive purchases or spends all the money for personal needs. If you don’t want to live on credit, you need to be self-disciplined or have someone who can help hold you accountable to your goals.
  3. Expenses are greater than income. Today even a person with a bad credit history can get a loan from a bank. It’s still not worth getting carried away with this and taking several optional loans. First, you need to expand your income sources, and then your expenses, and not vice versa. Plan living and spending, based on income (and if your income is not enough to even basic needs, then you need to look for a new job or additional sources of income).

Set up multiple savings accounts

This is necessary so that there are no illusions that you have accumulated an impressive amount and you use it all at one time, for example, for a vacation. It is better to open several saving accounts separately for your first home or a new baby or simply Christmas gifts. Jessi Fearon says, “Having separate accounts for designated areas of spending is an easy way to keep track of and to remain in control of your money. There are six savings accounts that I believe are important to most families in order to protect them from catastrophe.”

Reduce family expenses

After 2-3 months of accounting for expenses, you will get a picture of what you are spending your money on. Analyze your spending structure and think about what family money expenses can be reduced and what can be spent more on. The analysis will help to re-evaluate your expenses.

Teach children financial discipline

We often regret that it is not taught in school. Take care of the financial education of your children yourself. It will be very useful and may appear as an interesting family activity. For example, you can find ways to earn money as a family to save towards a special family purchase or vacation. The kids can be in charge of keeping track of the income and when you’ve reached your goal.

You can also use apps such as Mydoh to help kids earn money via doing chores or collecting an allowance. This lets you discuss the money your kids are earning and how they are spending it. Learning to set money goals and work towards them from a young age will help kids stay out of debt when they get older. (And often we learn from our kids! Helping them make good decisions with their money can help us do the same.)

Consolidate your debt

If you have multiple credit cards with balances, see if you can transfer all of the debt to one card with a lower interest rate. This is how credit card debt consolidation works. It will save you money on interest each month and make it easier to get out of debt.

There are a few different ways to consolidate your credit card debt, and the best option for you will depend on your individual situation. One popular option is to get a personal loan from a bank or credit union. You can also use a balance transfer credit card, which will allow you to transfer your balance to a new card with a lower interest rate.

If you own a home, you may also be able to get a home equity loan or line of credit to consolidate your debt. But before you decide to consolidate your debt, it’s important to understand how it works and what the pros and cons are.

Prioritize wisely

It is better to choose something material and tangible as reference points. By prioritizing, you will know what you are saving for and how long it will take. For example, saying, “I want to go on a vacation somewhere someday,” doesn’t help you save up for that. Start to plan your next vacation so that you know how much money you need to save up and when you might want to go (e.g., you want to be in Mexico in January so you have 10 months to save a certain sum in order to go).

If you don’t want to live on credit, what tips help you to keep track of your budget and stay out of debt?

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