Credit card debt is crippling around the world with plenty of people in a financial hardship that might take a decade to overcome. According to ElitePersonalFinance the total US consumer debt currently sits at over 4 trillion and has increased nearly 21% over the last four years.  This is a staggering number to say the least. According to ValuePenguin the average US consumer has around $5,700 in credit card debt which at a 10 percent interest rate which is lower than most cards this totals $570 of interest per month. On a 20 percent interest rate this would cost around $1,100 which would be a mortgage payment in some areas of the country. With these factors it is no wonder that people rack up debt so quickly as a lost job after putting a large purchase on a credit card can haunt a person for years. The following are tips to avoid debt in your life as it can impact your quality of life in very negative ways.

Gather All Your Financial Information

List Out Average Expenses Over The Last Year

Listing out average expenses over the course of the last year can really shed some light on where money is going annually. Finding out that a bulk of extra income is spent on subscription services that are barely used can allow a person to avoid debt by saving extra money. This will allow a person to set a realistic budget and this allows them to concentrate on those areas where they need to start saving. Luckily there are also apps that can help you stay on budget as tracking can be difficult with every little expense that might come up randomly.

Start To Live Within Your Means

The one thing that many people in debt do is live outside of their means in one capacity or another. Entertainment expenses seem to have risen with people opting to order delivery due to its convenience rather than eat a meal prepared at home. Rental costs increasing have made it very expensive to have a decent amount of space at an affordable price in cities like that of San Francisco or New York. Those people that might have taken on too large of a mortgage need to figure out a way to earn more money or consider downsizing. People often times get a home much larger than they currently need to grow into the home over the years. Live within your means and this can usually be done by cutting certain expenses across the monthly budget.

Start Earning Supplemental Income Online To Pay Off Current Debts

The freelance economy is extremely healthy with businesses and individuals needing help with a plethora of tasks. For those people that are great writers they can write for business’ blogs, product descriptions, or website copy. The average person is consuming more content than ever before so companies need engaging written content to be produced on a regular basis. This extra income can be used to pay off current debts or put away money just in case a credit card bill gets out of control on a specific month. The one thing to understand is some of this money has to be put away from taxes as you do not under any circumstances want to be in debt to the IRS. Putting this money into a bond or mutual fund can allow it to grow until it is needed.

Invest Instead Of Spend

People spend money on things that have diminishing returns like that of going out to eat constantly. Replacing this spending with investing in things like stocks or mutual funds can allow you to grow your current amount of money.  There are even peer to peer lending platforms that can allow you to lend your current money to another person earning interest off of the loan. Take the time to set goals on investing rather than what you want to buy. This will yield results you could have never imagined as some stock investments can be life changing when investing in a startup that makes it huge.

Educate Yourself On Personal Finance

Many financial mistakes do not occur out of lack of regard of what should be done but rather lack of knowledge on how to take on a situation. Lenders are going to be quick to give money out to those that can pay it back with interest rather than educate you on why taking the loan is a good or bad idea. There are so many resources online that can allow a person to understand thing like how much they should be spending on rent or entertainment in regards to their overall income. Education on things like certain industries in the stock market can be incredibly profitable but there is a risk with stocks which needs to be understood. Set a goal of learning one topic in-depth per month in areas where you want to learn more or lack over knowledge.

Staying out of debt can allow you to make decisions based on what you want to do rather than what you need to do because of finances. Start to eliminate poor spending habits one at a time as this will be a process but it is more than possible although it might not seem like it. Your life will be better out of debt so continue to make decisions that impact your financial health in a positive way!