How to Avoid Drowning in Debt on a $35,000 Income

Debt is so easy to get into and so hard to get out of, especially when using credit cards. It's easy to rationalize the need for carrying a wallet full of credit cards ... and buying on credit to take advantage of bargains and actually "save" money. There are ways however to still live within your means without using credit cards and work towards eventually attaining the peace of mind and security that comes from living debt-free. Here are some practical suggestions that really work:

Set A Household Budget And Stick To It

Any business that doesn't plan a realistic budget and adhere to it usually winds up in financial trouble. A household is no exception. Budgets are financial road maps and without them, it's easy to get lost and wind up deep in debt. Base your budget on an "after tax" income of $35,000 ... figure about $28,000 actual cash on hand to spend.

Planning the budget is easy. Sticking to it ... especially during the holiday season .... is what's tough. Stay within your budget and you can live debt-free

Pay Cash Whenever Possible

Credit is what gets millions of people so far in debt they can't get out of it. Use cash whenever possible. This way you only spend what you have on hand at the moment and not a penny more. For example, if you're going food shopping, take along just $50 cash ... or whatever your food budget is. This way you'll spend just that and not be tempted to spend $75 and use a credit card which means incurring debt.

Pay Down or Pay Off Your Mortgage

Don't take on a mortgage you can't afford. Once you have a mortgage try to pay it down quicker or pay it off entirely. You can begin doing this by paying as much "additional" principal off each month as possible. By paying off "additional" principal, i.e., more than required by your mortgage contract, you begin lowering your debt and your monthly mortgage payments. This in turn helps your $35,000 income go farther. There are also cash management programs and software applications that claim to help you pay off your mortgage and become debt free in 10 years or less. These are only for financially savvy people and require that you adhere very strictly to a financial plan with rigid payment requirements and spending limitations.

Credit cards create instant debt that builds up rapidly as interest and finance charges accrue. Avoid using credit cards and use debit cards instead. Since debit cards use the actual cash you have deposited in your bank account, you don't incur any debt. Just be careful not to spend more than you have your account, because even if you have overdraft protection, you'll not only have to pay the amount of the overdraft, but usually a $35 or higher overdraft penalty fee.

Leave "Emergency" Credit Cards At Home

Don't carry a wallet full of credit cards when you go shopping or out to eat. Even if you only carry a one or two cards for "emergencies", leave them at home too. If you have the credit cards in your pocket, you'll find an "emergency" in which to use them. Take only cash and your debit card.

Don't Go Into Holiday Debt

Christmas is a wonderful time of the year to enjoy, but be careful not to get so caught up in the season, that you wind up going into debt. Have a "cash" budget to spend on Christmas for gifts, decorations, clothing and food. Start shopping months in advance to find low prices and "pay cash as you go".

Shop At Consignment Stores, Thrift Shops and Flea Markets

At consignment Stores, thrift shops, and flea markets, you can find a wide variety of "gently used" and even new clothing and merchandise and prices far lower than most stores. You can also find vintage merchandise and even some legitimate antiques too at lower than usual prices. This helps you stretch your $35,000 income and budget, without putting you into debt ... provided you pay cash or by a debit card of course.

Shop Online First

Before you spend money on gas and parking, shop online and compare prices with local stores. You'll find many online merchants offer the same merchandise as stores, at lower prices and offer free shipping too. Shopping online and paying with a debit card help make sticking to your budget easier too.

Plan For "Paid" Vacations

Vacations need to be part of the budget too, and of course, paid for without the use of credit cards. Set a "cash" vacation budget ... for example $1200 for the year ... and decide exactly how you wish to allocate it. You can spend it all on one week long vacation ... or possibly three long weekend getaways at $400 each. Just don't over spend your budget and have to rely on credit cards to bail you out but create additional debt.

Enjoy Cocktails at Home

Before you go out to dinner have your cocktails at home and save a considerable amount of money. Having a martini made with premium vodka at a restaurant, for example, cost as much $15 per person plus tax and gratuity. Making the same drink at home costs less than $2 a drink and saves you over $13 a drink. This helps you have fun and stick within your budget so you don't go into debt.

Shop On Lay-A-Way Plans

If you're shopping and see a great outfit on sale ...or a piece of furniture for the home that you don't have the money for at the moment .... don't put it on a credit card. Instead ask the store to put it on a "lay away" plan where they'll hold it until you can get the money to pay for it. Some stores have plans that let you put a small deposit on it and then make periodic cash payments over time until the merchandise is paid for. Lay away plans can be used almost like credit cards without incurring the debt.