Keep Yourself Away from Debt — Debt Free Money is Better
All people across the world work and earn money to lead a comfortable life. The definition of comfortable life though, may vary from people to people depending upon their income. For instance, what might be comfortable or luxury for a construction worker is definitely not the same for an established professional lawyer. Since the latter earns more money, his standard of living is higher. Fixing Finances says important to understand what the standard of living you will adopt is, so that you can live within your means. If you try to indulge in luxuries that your monthly income does not provide for, then you will end up in debt. Continuous debt can be very harmful for your financial well being. Most of the times your debt situation reaches such a level that you have to consolidate debt in order to pay all of them back.
How do you end up in debt?
Debt is very harmful for your financial stability. The amount of money that you earn every month goes towards providing for yourself and your family if you have one. However, most people tend to overstep the limit. When you have credit cards with you, buying things becomes easier as all you have to do is swap the card in exchange of the product that you have bought and the amount is credited from the balance on your card. If your credit limit is high, it means you can borrow more money. It all may seem to sound very easy and simple, but in reality this easy way of getting money leads you to such a problem which is not at all easy to get out of. As you keep mounting balances on your credit cards you lose a track of how much you have spent. And then once the payback period is over, which is one month, you start gathering high interest rates on your credit card debts.
Why should you have debt free money?
It is very difficult to come out of debt once you have mounted a substantial amount of it. There are two main reasons for this. Firstly, credit cards come with a high rate of interest. Thus when you are in credit card debt, most of your money will go towards making the interest payment itself. You will see that you are hardly able to save any money to pay back the principal amount. Secondly, your income remains the same, even after debt. Hence you are likely to find it very difficult to cut down your expenses drastically so that you can save substantial amount of money to pay back your debt. In such cases you have to go for various debt relief options some of which may even harm your credit which is already under stress due to debts.
Thus you can see how important it is to have debt free money. When you are in debt, your hard earned money goes to waste as so much of it is used up in paying the interest payments on your debts. So it is better that you live within your means and use the money that you earn.