How to Avoid Accumulating Debt This Coming 2020

Debt is something that a lot of Americans deal with every year. Or in most cases, every month. If you're sick with dealing with debt and want to avoid it as much as possible in 2020, then this article is for you.

Americans owe a staggering $1.04 trillion in credit card debt alone, billions of dollars more than the total debt recorded five years ago. Needless to say, accumulated debt can take years to pay off and even cause some families to find a reputable Chapter 7 bankruptcy lawyer in Salt Lake City and other places where debilitating debt is rampant.


If you don't want to be saddled with a debt that you cannot pay off, here are some tips to guide you:


1. Create a monthly budget and stick to it


Computing finances with calculator

The best way to get your expenses under control is to set a budget. Although most families already do this, some find it hard to stick to the budget and often find themselves spending more than they should.


To start, create a budget plan that would cover all types of basic expenses, such as food, housing, utilities, and clothes. Then, create a list of your income streams to see if it can cover your budget comfortably (if not, you may need to pick up a few extra hours or find a new income stream). This strategy will allow you to take control of where you're spending your money, so you can fix any possible problem area. It's also an excellent way to avoid going over budget and charging things to your credit card.


2. Charge what you can afford


The golden rule is: if you can't afford to pay it in cash, you can't afford to charge it on your credit card. Don't use your card to buy things that you cannot afford in the first place, as this can burn a great big hole in your finances and give you bad credit. 


3. Pay your balance in full and on time


Avoid credit card debt by paying your monthly balance in full and on time every month. If you miss a payment or don't pay it in full, you would have to pay more the next month with late fees added on top. This is crucial if you want to keep debt from accumulating. Moreover, it will only limit you to charging what you can afford every month, which is always a good practice. 


4. Avoid cash advances


Withdrawing money from your credit card is one of the riskiest ways to get into credit card debt. It's also a telltale sign that you are in financial trouble. To avoid having to make a cash advance from your credit card, have an emergency fund or fix your budget to avoid having to use a cash advance.


5. Stick to cash


Person handing money

If you don't have steely self-control, using your credit card is going to be highly tempting. If you use the cash more often, however, you're going to see when you're out of money physically. Making it a habit will have you relying on your credit cards less and less, reducing the risk of going into debt.


Having your finances all over the place will put you at more risk of bankruptcy when something untoward happens. With these tips, you can have your expenses under control, which can give you good credit in the long run.

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