As we head into another decade, you may be thinking about your financial future. With so much hanging in the balance, it’s important to take control of what you can. This is a great time to evaluate your past financial decisions — think about what worked, what didn’t, and why.

Write down your financial goals for 2020. How do you want the next decade to look? If you want to avoid getting buried in debt, you’ll need to resolve to change some habits and build up some defenses.

How Does Debt Happen?

This may seem a silly question to ask, but it’s important to emphasize that debt occurs because people spend more money than they have. Credit can be good or bad, depending on how you use it. For instance, if you pay off your credit card balance in full each month, it isn’t really considered debt since you aren’t paying any interest on it. Safe and easy transactions, rewards points, and other credit card perks can be enjoyed at no charge. Learn 5 ways to reduce credit card debt.

Unfortunately, a large percentage of us ends up carrying a credit card balance and paying interest every month. The interest can send you further and further into debt, leading to low credit scores and constant calls from creditors.

If debt has gotten out of control and you are receiving harassing calls from collection agencies, contact DebtBlue for your free consultation to discuss your options. We can contact your creditors for you and negotiate a debt settlement to simplify and shorten your repayments.

Luckily, debt can be avoided.

How to Avoid Debt in 2020

  1. Know how much is coming in and how much is going out

Write down your monthly income and circle it. Then, create a column of all your monthly expenses. Create another columns with all of your debts listed with their interest rates. This simple act of assessing and monitoring your finances can keep you out of debt since most people overspend without knowing.

  1. Don’t spend what you don’t have

With the holiday season upon us, it’s easy to feel pressured into spending money on gifts, entertainment, and decorations. About 1 in 10 Americans takes out a loan to cover holiday expenses. While we want to make the holidays special, we need to prioritize certain things, like rent, food, and utilities.

So, make a budget and stick to it. Determine how much you can reasonably spend while still having enough to pay the bills and prevent debt. Learn how to stay on budget during the holidays.

  1. Anticipate and save up for major purchases

If you know you are going to buy a car, go on vacation, or purchase a computer, create a sub-savings account. This can be done with most savings accounts. Contact your bank for help. Once you have set up a sub-savings account, you can name it for any financial goal you have: “Wedding,” “Travel,” “New Car,” “Down Payment.”

The next step is to set up automatic transfers from your checking account into your sub-savings account. Start by putting aside about 3-5% of your income and make changes from there.

  1. Always read the fine print

Whether it’s financing or a new credit card, always read the fine print. Zero interest and zero money down can seem attractive, but you’ll want to look at the details. What if you miss a payment or make a late payment. You could end up spending a lot more than anticipated.

When making any credit decision, make sure you shop around and choose the best option. Remember, many of the advertised “interest free” claims only last for a short period of time. Be sure to budget for all costs and add the payment dates on your calendar.

  1. Be organized

Planning, budgeting, and organization are the keys to a healthy financial future. Since there’s so much to remember when it comes to your finances, we recommend automating as much as possible and adding everything to your calendar. Make sure you always pay your bills on time, even if it is just the minimum payment. Otherwise, you could be slapped with additional fees.

A new year is all about learning from the past and planning for the future. Take a moment to think about how you will do things differently this year and moving forward. Read our blog for more personal finance tips.

Call DebtBlue today for your free debt consultation! We can help you plan for a debt-free 2020.