Being in debt especially a heavy one is a terrible thing at current economic downturn. Many has predicted this ‘Great Recession’ to be a prolong one lasting two years or more. If you are one of the many unfortunate ones, the best you can do is to keep afloat, keep stock of personal finance, find out why you are in debt in the first place, work at reducing the debt and hope for the best. We list here 9 tips that might be helpful for staying out of debt.
### 1. You need to change
You need to make changes to your attitude about money and behavior in order to have any result. How you value money impacts your spending decision. Find out why you feel good owning the latest tech toys even though you might not use it at all. Is it for vanity reason? Or is it for making up of lack of toys when you were a boy/girl? If possible, find out how much ‘coolness’ is worth to you. Getting out of debt is not a todo list or action items, its a lifelong commitment to a lifestyle change.
### 2. Cause and effect
Before you spend on your next purchase, check the consequence of your action especially if you are buying on credit. Shopping on credit card makes you feel good NOW, but the painful impact comes much later. Think about the future credit card bill and the pain it will bring before you buy. You would jump off a hot seat immediately because of the pain, why not for shopping on credit?
### 3. Understand your justification
If you are in debt, buy only the necessity. Check your justifications on why you buy, many of them are just excuses that make you feel less guilty about the purchase: “I need to pamper myself for just one last time”, “I have been working very hard and this is my reward”, “I save more when I buy it now during the promotion”.
### 4. “Never spend your money before you have it”
This is a quote more than 180 years ago by Thomas Jefferson.
### 5. About credit cards
Keep using credit cards **if and only if** you can pay off your bill every month.
### 6. Think in terms of percentage
Use percentage instead of absolute value when comparing risks and returns for a better financial decision. A credit card that charged you $90 interest for a $6000 balance is a cheaper card than one that charged you $35 for a $2000 balance.
### 7. Pay yourself first
When you are buying something, you are paying for the livelihood of people who build and sell the product to you. Instead of buying things and paying them, you should pay yourself first by keeping a portion of your income for savings and for clearing debt. Why make yourself miserable at the end by making other people happy?
### 8. Personal finance management
Learn about financial management basic, but beware not to fall into trap of spending big sum of money on it. View yourself as a financial entity. Business is constantly looking at better ways to manage resource and to reduce expenses, we can do the same as individual. It is common for business to have multiple streams of income, why not us as individual?
### 9. Earning money vs spending money
Measure the amount of effort and time you spend on earning money vs spending money. Are you one of those who can spend many hours or days online reading forums and reviews to make sure you get the best deal on a digital camera? You should devote more of your time and effort on activities that can lead you to earning more money.