The economy has various ups and downs and in times of bonanza, confidence in economic possibilities makes us have a looser portfolio. In other words, we are careless when it comes to spending and we run the risk of over-indebtedness. The saving capacity of families and individuals is in low moments. Although requesting a loan should not pose any problem, when we chain one after another it does. In this article we are going to give the keys to avoid over-indebtedness and allow your economy to breathe a little.
What is over-indebtedness?
It is the situation in which a debtor is unable to cope with his current ability to pay the different debts. In other words, you use more money than you can to pay. This results in a successive over-indebtedness from which it is increasingly difficult to get out.
Over-indebtedness has various causes, from losing some source of income to compulsive spending. Unnecessary purchases or the lack of a budget in line with our economy are a slab. However, there are a number of keys that can help us avoid continuing in that spiral. The lack of financial education is largely to blame.
Keys not to get into debt
First, apply a simple economic law: never spend more than you put in. We have to reach the end of the month with some money in the account and have allocated a part to save. Why? If there is an unforeseen event, such as an appliance breakdown or a fine, we will avoid having to borrow money . Either a family member or a bank.
In the case of credit cards, it must be borne in mind that well used they are an excellent means of having liquidity. However, they can provide the feeling of non-existent liquidity. Used wisely they can be a good incentive, but they should never be the basis of our domestic economy.
Shopping, so desirable as a rule, must be avoided compulsively. It is convenient to previously make an analysis of what we need and what we do not need. Whenever possible, try not to pay in installments for anything that does not have a long useful life , such as clothing. By paying in cash, we also avoid paying interest, which undermines our financial health.
Control and analysis of expenses
Controlling our expenses is perhaps the most powerful tool to avoid over-indebtedness. Either in a computer program or in a simple notebook, we have to keep a monetary control. Analyzing the expenses it is possible to realize how volatile money is. Only in this way can we redirect our economy to promote greater savings.
If we allocate more than 30 percent to the payment of debts, we are over-indebted. In this situation, the margin of action with respect to an unforeseen event is nil, which could lead to financial insolvency. Remember, divide your income into three parts and calculate how much you spend to pay debts.
Get better prices on a multitude of products, such as car insurance, travel or telephone offers thanks to the comparators. In Ideal Loans we put at your disposal a useful financial comparator. It allows you to obtain valuable information when requesting a loan, knowing which is the best for you and thus saving. Getting out of over-indebtedness is a matter of proposing a realistic debt route plan. By making efforts and being strict, we can turn the tide on the situation and improve our economy.