Thomas Jefferson, 3rd president of the United States and the person responsible for lowering the country’s debt from $80 to $57 million within just two years of presidency, once said, “Never spend your money before you have it.”
Ironically, Thomas Jefferson died with a huge amount of debt.
Americans today aren’t much different. According to the Federal Reserve Bank of New York, as of the second quarter of 2018. Americans have a total of $13.29 trillion in debt.
As the amount of American debt can attest, not spending more than what you have isn’t an easy thing to do, especially in this economy.
While it may be helpful to take out loans from time to time, you must also ensure that you can pay them off on time.
Most importantly, you shouldn’t take out loan after loan. That is a debt trap waiting to happen.
With that in mind, here are 5 things you can do to avoid falling into a debt trap:
It’s tempting to take out loans so you can afford a certain type of lifestyle. But, can you really afford a loan and, concurrently, the lifestyle you desire?
It’s advisable to only take out a loan when you actually need it.
For example, you don’t have savings, but you or a family member suddenly need medical attention. You can then take out, say, a car title loan in Texas to be able to pay for hospital bills.
If you’re only planning on remodeling your living room or going on a vacation, a loan isn’t the answer. Save up for such expenses, instead.
Limit the Credit
Credit cards give you an easy way to purchase since you can use them for online transactions or with one swipe in stores. They’re also perfect for giving you the chance to pay in installments. What’s more, most credit card companies let you earn rewards and, if you always pay on time, you boost your credit scores.
Credit cards, however, have the potential to be one of the biggest debt traps. Because credit cards give you easy access to money, you tend to spend more than what you can pay at cut-off.
Many pay only the minimum amount required when their credit debt gets too big, causing the remaining balance to accrue interest and, therefore, more debt – making your debt higher each month, rather than lower.
Budget Your Wallet
One of the easiest ways to avoid falling into a debt trap is by managing your finances. This method is also known as creating a budget and sticking to it.
When you create a budget, you are able to determine in advance how much money you can spend and save, and how much headroom you have in case there’s an emergency or essential, unplanned purchase.
With a budget, you can focus on what’s important for you to spend money on. You must learn to prioritize pressing, vital expenses over non-essentials that you may otherwise be tempted to purchase.
Title Loans With VIP Finance of Texas
Sometimes, you won’t have any other choice but to take out a loan.
If there’s an emergency but you don’t have the funds to finance it, don’t fret. Here at VIP Finance of Texas, we offer car title loans with the most competitive rates.
With convenient locations all over major Texas cities, we can deliver the financial assistance you need right away.
Apply for a car title loan with us today.