Anyone who has experienced crushing debt first-hand can tell you: it’s a trap. The more you rely on borrowing, the harder it gets every month. Often people get into trouble when they stretch their monthly budget by leaning on their credit card. The problem is, they don’t earn any more money next month. After paying for all their normal expenses, they’re not able to pay back everything they already borrowed. And that’s when interest starts to build, which only makes it harder and more expensive to pay it back.

Consumer Credit Counseling Services

Non-profit credit counseling services are a great way to start your debt-free life. Certified Credit Counselors from a non-profit credit counseling agency like Credit Canada can help you with a Debt Consolidation Program. They can help you get:

  • Lower interest rates, or no interest at all on your remaining debt;
  • A clear timeline and budget;
  • The knowledge you need to rebuild your finances afterward.

There are a lot of reasons to try a DCP over bankruptcy. For one, when you declare bankruptcy, it’s a matter of public record and it stays on your credit report for six years from the date you’re discharged. That can be a challenge that holds you back.

Time to Start Saving

Once you’ve put your debts to bed, it’s time to make some lifestyle changes that help you avoid it altogether. Fortunately, credit counseling will teach you some of the financial survival skills you need to make sure you stay out of debt in the future.

Your best protection against future debt is your own savings. An emergency fund is a way to rely on yourself when you face surprise expenses or lose your job. The size of your emergency fund depends on your situation, but if you never want to rely on credit to get by again, consider saving 6-12 months of expenses.

Don’t Wait for Statements

Sometimes people who have been deeply in debt in the past worry that they’ll relapse and rely on credit cards again. However, you need a payment history if you want to rebuild your finances and qualify for loans in the future (such as a mortgage).

One way you can avoid the debt trap and still use a credit card is to pay the balance early. Rather than wait for your end-of-month statements, pay off the card as you make purchases. With online banking, it’s easy to transfer money immediately. You can rest easy knowing you’re not digging yourself into a hole.

Pay Up Front

There are purchases in life that may not be practical to save up for before you buy them. A house is a perfect example. But there are other big purchases that can make more sense to pay for in cash, such as a car or a wedding.

When you carry a balance on a loan, you have to pay interest. That inflates the cost of the thing you bought well above what you thought you were paying to begin with. Paying cash up-front is a smart way to pay less for everything.

These lifestyle changes will put you on the road to avoiding debt for the rest of your life.