13 really quick meals to make now that school is back in sessionAlways Broke? 4 Things Debt-Free People Never Do
Getting rid of debt | Source: iStock
Are your bills piling up in a corner on your desk? Is the rubber band you wrapped around your bill statements ready to break? Then you could use a few lessons from people who are living with little to no debt. If you want to get on the road to financial freedom, we can tell you how to get there. Here are four things debt-free people never do.
1. Pay bills late
Those who enjoy little to no debt understand that paying bills after the due date will only result in late-payment fees and a less-than-perfect credit score. If you think paying a few days late is no big deal, you’re wrong. Did you know that credit payment history makes up 35% of your FICO score? If you want to achieve financial health, remember to pay your bills on time.
If you have trouble remembering to pay your bills, set up automatic withdrawals from your bank account so you won’t have to worry about missing a payment. Glenn Craig, founder of personal finance blog Free from Broke, said another useful tool is Google calendar. Craig said he uses it as a bill payment calendar to remind him when to make certain payments.
2. Ignore savings
Man budgeting money | Source: iStock
If you want to steer clear of debt, it’s important to have a healthy emergency savings fund. Rainy days will come, so do yourself a favor and prepare now. If you don’t take the time to build your emergency savings fund, when you do have an emergency, you’ll have no other choice but to borrow from friends and family or pay with a credit card. Before you know it, you will have dug yourself into a debt hole that’s hard to get out of. Financial planners recommend saving at least three to six months’ worth of expenses.
According to a Bankrate survey, roughly 63% of Americans said they don’t have enough money in savings to cover an emergency such as a $500 car repair or a $1,000 emergency room visit. Just 37% of survey respondents said they would be able to withdraw money from their savings account if they had an unexpected expense. In addition, another Bankrate survey found that one in four Americans has more credit card debt than emergency savings.
3. Lend money indiscriminately
Money exchanging hands | Source: iStock
People living the debt-free life are careful with their money. They don’t lend money to anyone who asks. If you decide to lend money to friends and family, first make sure you can afford to do so. Lending money when you don’t really have the means can put you in a tight spot if you ever have a financial emergency of your own. Also be aware that you may not get your money back; just think of it as a gift.
4. Rely on credit
Credit Cards | Source: iStock
Do you use your credit card often, even for small expenses? If you want to get closer to kicking the debt habit, you’ll need to get used to using cash and keeping the plastic at arm’s length. People who are debt free (or close to it) know that credit should be used sparingly. They avoid a big bill later on by paying off the balance as soon as possible and keeping a close eye on due dates. Credit cards come in handy when you need to book a hotel or make an online purchase. However, credit can be dangerous when overused.
No comments:
Post a Comment