Managing or preventing your debt
Debt arises because of sudden requirement for cash and you need to borrow money to get that thing covered. The sudden need for cash can arise because of medical reasons or accidents and so on. Situations like those can get difficult later on because the debt keeps piling up if it is not taken care of on time. On the other hand, there are people who simply borrow money out of greed. For example, you need to buy a car and you get paid on Friday. The logical way would be to wait until Friday to buy the car. If your greed gets out of control, you may simply borrow some money and buy the new car today itself. As a result, you end up paying more.
This became a very simple example. That attitude can become a disaster on the long run. These days, it has become so common to have debt that people use debt as a solution to open new opportunities. That is not the right way to do things because it is going to turn itself on you at some point in time. If not on you, it will definitely affect your children.
The main reason for having debt is lack of control on your habits. Greed and carelessness> results in reckless spending of all the wealth you have. In fact, the wealth never gets any chance to accumulate. To avoid borrowing money in emergencies, saving up money can really cover you for unforeseen situations. If you are a parent, this habit needs to be inculcated in your children which will make them more responsible spenders in future.
A lot of credit card owners simply spend their money, which does not belong to them to get things they do not really need. When the debt becomes too much, they borrow more money from somewhere else to pay off the first debt. The result is, you now have a larger debt to take care of. The cycle continues until your situation becomes very tough. There are debt consolidation programs out there that will at least help you manage your debts and combine all the repayments into one. But these programs are there to make profit for themselves. You will be paying an extra fee in this case.
Once, again we come to the point where it concludes that we need to change the way we spend and how much we spend. Best way to prevent this situation from ever arising is to stop borrowing money completely. Teach your children that borrowing money is bad so that they will never do it unless it is extremely important to do so. All the debt problems start off with the first time you borrow money, be it through credit card or through bank loan.
A lot of people out there have never taken a loan in their lifetime and yet live a completely happy life. Why is that so? Because they learnt to manage their income and invest their money at the right places. Instead of paying interest on the loans, they were raking dividends from their investments. All it takes is a little resolution to stop yourself from borrowing again!
