5 Things to Avoid to Stay Debt-Free
Being in debt is one of the most mind-numbing experiences anyone can ever undergo. Apart from the helpless feeling of not having control over your finances, you’re also likely ducking and dodging creditors looking to get their money back. While borrowing money is sometimes unavoidable, there are at least five things that you can steer clear of to ensure that you don’t get trapped in a cycle of crippling debt.
PawnHero, your easy and convenient online pawn shop, takes a look at these five things and offers the best ways that you can avoid them. We make our tips as practical as possible so everyone can live debt-free and happy lives.
1. Credit Cards
It’s easy to see the appeal of credit cards. They let you buy stuff online, they let you buy stuff safely, and they let you buy stuff without (for the moment, at least) having to put out your own cash. That last bit is where the problems lie. Without having the physical sensation of having your funds decrease when you buy things, it’s harder to put a stop to the actual buying of things.
Many, many people will gladly declare themselves immune to this kind of thing but few actually are. And why not? We all want to own things even when we don’t necessarily need them. The hard part is when the bills come (with the attendant interest rates) and you find yourself without money to pay them. Avoid these “blank checks” when you can or risk being hounded by collection agencies when your “past due” dates fly on by.
2. Debit Cards
There are two kinds of debit cards. The first type of debit card draws straight from an attached savings account. Technically, you don’t directly get into debt with these cards. Spend too much and your savings merely dries up. The risk of getting into debt comes in when you do run out of funds and have bills to left pay. Where do you get the funds then? If you absolutely need to get a debit card to get into the whole online shopping things, get the second type.
This second type of debit card is the prepaid or reloadable type. It doesn’t draw directly from your savings account so there’s no risk of “accidentally” being left with those annoyingly small 25- and 5-cent coins at the end of the month. A lot of these kinds of cards are loaded via their respective banks’ websites or even downloadable apps. They might make it harder to overspend, but you still have to keep watch lest you load up too much of your money.
While sales always aim to get you the best deals on great items, the spending can still leave you with a lot of money owed if you’re not careful. Sales are especially dangerous in tandem with a credit card as many are more likely to argue the “wisdom” of spending “less” on many items with less control over the amount being spent. People who shop online are particularly easy targets for sales as many online shopping malls provide a convenient way of applying discounts.
While it’s next to impossible to be free from online ads and promotions these days, you can help avoid the trap of spending too much on the items being sold by subjecting the items to a test. If you can provide one great reason (preferably to someone you know) why you can’t live without that item, go for it! If you hesitate for any reason, then walk away. Additionally, if you can’t buy an item outright with the cash you have, you very obviously can’t afford it.
4. High-Interest Loans
If avoiding high-interest loans seems like such a no-brainer, then you’ve never had too bad of an emergency yet. When a loved one is sick and in need of medicine or an operation fast, you’re more likely to grab the first opportunity at the cash you need to meet these needs regardless of the interest rate. After all, people’s lives are always more important than money, right?
The key here, actually, is more careful research. Don’t grab the first option you find simply because they offer money fast. Think about it. If your loved one has medical expenses that run through a long period of time, then it doesn’t make sense to trap yourself in debt now and be even less able to meet their financial needs later on. PawnHero has an advantage over traditional pawnshops in that we keep our rate low and fixed.
5. “Irresponsible” Loans
“Irresponsible” loans are a personal peeve of mine. These are the types of loans and associated lenders that keep letting you borrow even when it’s abundantly clear that you really can’t pay any of them back within a reasonable period of time. They give the illusion that you’re getting the help you need. What you’re really getting is temporary relief. Temporary until they all start bugging you to pay back.
“Responsible” loans on the other hand, allow you to borrow what’s within your capacity to pay with little risk of drowning yourself in debt. Pawning in an online pawn shop is one of the better options. Sure, you lose an item if you don’t get to pay back, but that’s the only risk. No hits to your credit rating, no harassing calls hounding you to pay and relying on threats, no chance to fall into a debt trap. And because you’re aware of what you’re losing, you have more leeway to take responsibility and build a mindset that aims to pay back what you borrow.
Everyone Needs a Little Extra Cash Sometimes
And it’s actually perfectly OK! What you need to bear in mind is that there are solutions that stand out as better in both the short term (meeting your need) and the long term (keeping you debt-free). With pawning, you take charge of your borrowing and leverage on something that you yourself own. The risk of loss might be there, but at least it’s a clean cut with no risk of carrying the debt into the future.
With pawning at an online pawnshop, you have the additional benefits of security and convenience all rolled into one. This maximizes on what you gain while minimizing the risks. You can even test out the system with a free estimate on your item.