You would be amazed that how much you are spending on things which you might not even need or avoid very easily. I am not suggesting that you stop buying coffee if that is what you need to kick start your day at work. If you stop doing that you will not be performing at work and that is the last thing I would suggest. Based on your findings you decide now that what you can avoid and where you can save money.  Seeing the actual numbers will surly a big motivation for you.

You may consider following 5 things to save money and avoid getting into debt:

1. Reduce the frequency of eating out. If you have the habit of eating out every night, then you might consider eating at home by preparing your meals at home. You might consider making more than one meal at time so that you do not have to spend time every day making your food after coming back from work.
2. Are you the one who always want to purchase name brand merchandise? If the answer is yes then consider buying store brands as those are just as good. Some store brands are made by name brand companies and are the same product, just with the store brand name. And they are just as good, if not better.
3. You may consider borrowing movies from the public library for free instead of paying the rents. Well it does not mean that you want to watch a new release and wait for it long time before it is available in library. Similarly you may want to consider watching a rental movie with your friends and sharing the cost with them.
4. Coupons are a great way to save money and most grocery and warehouse stores offer discount coupons that can save you significantly. There are many websites from where you can print the coupons and use them to save money. You may also consider hunting for freebies which you will use.
5. Have you ever consider barter and trader with others. You may have many items in your home that you do not even use anymore and may be able to barter those to get items you need. It is a good way to save some extra cash.

You have actually taken time to calculate all the expenses for one month, so why not keep on doing it and find out how much you are saving by using the above tips.

Avoid Buy Now Pay Nothing Till ….
I am sure that all of us have seen these flyers and newspaper advertisements with bold big headings begging you to buy all those big ticketed items now and pay nothing for next 12 months or even 24 months. Well it does feel good to buy all that stuff without paying at that time but the only catch is that if you don’t pay on time, you will be sucked into debt for years. The interest rates on these offers are usually very high and start to accumulate from the day you made that purchase. General rule here should be that don’t buy if you don’t have money to buy. So, it might be good idea to save first and then buy that product.

Change Your Attitude:
Do you remember a time when you had the money to pay your credit card balance and you didn’t pay it on time just because of your laziness or habit? Your this little mistake will cost you extra cash to pay and you may be paying the interest for next two months for all the purchases or cash advances you make using your credit card. Just close your eyes and think for a moment. Is it really worth missing your payment for even a one day when you have money? I am sure your answer will be no. So don’t do it next time and pay your bills on time.

We need to change our attitude towards the debt. If we borrow money, we need to pay it on time or we should avoid borrowing money.

Credit Cards Are Not Bad if Money is Paid Back on Time!
Are credit cards bad or having credit card is like being cursed? The honest answer is NO, credit cards are not bad it is the way we use these cards. I understand that if you have the credit card in your pocket, then you may want to use it for any thing you like and feel urgency to buy. The rule here is curbing that habit of buying things when you don’t have money or you don’t need them. I would not buy anything using my credit card if I have no money to pay that back. If you believe that you can’t do that then you may think of getting rid of all the credit cards and use either debt card or cash only for all your purchases.

In conclusion, debt is not about borrowing money, but managing your money and paying it back on time. There is no problem in borrowing money when you need it as long as you pay it back within the time.

When Debt is Not Bad?
Is it ever possible that debt can be good? People starting businesses, or expanding the business for making more money borrow money all the times. The idea here is to borrow money and use the loan or debt for generating income stream that not only lets the borrower pay the debt but also make some profits. So as long as you are paying back your debt from the money you making by investing the borrowed money.

Is it that simple then why not everyone borrowing money and making good money? Why people are declaring bankruptcy all the time? Don’t just follow other’s foot steps. If you borrow money for business for which you didn’t do any market research or proper planning, the chances are that you will fail in that business. Not only you will loose the business but also you will fall directly into debt hole.

However, on the other hand if you invest into ventures for which you have the passion, know how, and experience, you have higher chances of walking on to the path of success. The key here is not to dream high especially when it comes to business projects you should always measure your pros and cons before starting new projects.

When Debt becomes Ugly?
Let’s say you don’t have money at all to meet your expenses and you keep on borrowing using your credit cards or from some other financial institutions to spend on your day to day living expenditures. You can clearly picture yourself falling deeper and deeper into the debt pit. The deeper you are into debt, uglier the things will become for your.

This was an extreme case. Now let’s consider a scenario where you do have money in your account and you can have a decent living from your income sources. Some how you are pressurized socially to make big ticket purchases which you don’t even need or you don’t have the money to spend on. An example could be that one of your neighbors bought a new trendy car and you felt the urge to purchase the similar car which is beyond your means. Soon you will be deep into the debt. However, if you save money first and then buy the car or find a deal where your monthly payment is never going to be more than what you earn, there should be no problem.

The key here is to carefully judge your financial means and manage your income so that you stay out of debt. Remember that even though you don’t have a posh car or a luxurious lifestyle, as long as you are not broke and stuck in the debt pit, people will still respect you the way you are. Imagine if you are broke just because you made financial mistakes of spending money on things which were beyond your means, will people still respect you?

Now that we have understanding of the fact that debt can be ugly but if we use the debt for carefully judged investment, the same debt can be the best thing you may ever have. In part-2, I will talk about some steps you can use to avoid bad debt.

1. First of all we need to make a budget for our shopping. Lets say we want to spend $100 today. go to bank and withdraw $100 cash from bank account.
2. Before leaving for shopping, remove all the credit cards or debit cards from wallet and leave these at home.
3. Use cash during the shopping and if you don’t have enough money to buy something, then consider other options which you can afford to buy.

So that was as easy as 1 2 3…. I am sure you will not ever spend over budget this way. That will keep you debt free for the rest of the days.