In this installment I want to touch on ways of staying ahead once you start to gain traction in your budget, and build a saftey net. Staying ahead is important once you have some room to move. By staying ahead of the game I mean don’t let debt catch you once you’ve broken free.
Stay out of Debt!
Stay out of debt, don’t spend money that you don’t have! If you want that new Ipod you need to save the money and buy it with cash not credit.
Do not scratch the plastic, budget for it. Use your budget to buy the things you want as well as the things you need. The budget should never go away. Just because your out of debt doesn’t mean you don’t need a budget, you still have to control your money or it will run wild.
- There are some things that you have to barrow money for such as a house. No one has that kind of money on hand to buy a house with. But you should however have a considerable down payment. If you can’t save the down payment than you probably can’t afford the house anyway.
- The same would go for a new car. Have a down Payment and make sure your minimum payment is small enough for you to pay extra principal on each payment. This ensures that you will owe less on your car than it is worth. This is important if you were to need to sell the car for any reason (i.e. you can no longer afford to make payments), maybe you get injured and cannot work for an extended period, or drive. Now wouldn’t that be ironic? Making a car payment on a car you can’t even drive; now that’s cracked.
Keeping ahead of the game is easier once your out of debt, because you have more money to work (and PLAY) with. This phase of the game is really hard with debt because your budget depends on it. If you don’t stay ahead of the game, you’ll fall behind. This is where you can fall deeper in debt.
Keeping ahead of the game is the anti-meltdown. In the event of one of lifes’ little setbacks, your better suited to handle it without hurting your debt dumping efforts. I have been so far ahead on car payments and-once upon a time-credit card payments that the payee didn’t require a payment for a month or two. When you’re in that situation you can say, “fix the car” and not have to worry about the car payment. Just remember, you have to go right back to staying ahead on these things once the car is fixed. Stayng ahead of your debts does not stop until your debts are gone.
In the next installment of this series, “Winning the Game” I will cover Dumping Debt which will be Part 5
