4 Ways to Help Prevent Credit Dependency
When times start getting tight, more and more people start applying for (and even depending on) credit. Even the most meticulously organised of people can find it difficult not to rely on credit to get by – you’re not alone if this applies to you!
With LoanBird being a short term loan broker, we understand that consumers will always need credit, and we’re here to try and help you get the best rates in the market. However, the dream scenario for most people is, of course, to break free from debt and to start living on money they’ve made for themselves.
Sadly, becoming dependent on credit is all too easy. But can you avoid it altogether?
What Exactly Is Credit Dependency?
Credit dependency quite literally means being dependent on credit. This could mean relying on your overdraft, frequently maxing out your credit cards, often using more money than you generate, and needing credit to get you by.
The dangers of credit dependency involve never knowing if you have enough money for smaller purchases, having to go without particular necessities (such as new clothes, food, transport, etc.), and not being able to save money. Generally speaking, it also means that you are constantly stressed out by your finances!
Credit dependency is never healthy. While there’s nothing wrong with applying for loans or credit in any shape or form, it really does pay to tread carefully and to plan for a way out.
Here are some fantastic ways to protect your finances should you enter into a credit agreement – and how to balance your bank without any unnecessary stress:
Track Your Spending
The first and most obvious way to avoid falling deeper into credit reliance is to simply track your spending. Avoid unnecessary waste by making shopping lists to fit your meals for the week. Try meal prepping to know what exactly you will need, too.
It’s also wise to take a look in your pantry and cupboards and see what you have in! We all have spices, jars, and tins that we forget about but usually contain great ingredients to make fantastic meals! Use them up and save yourself some money – and use your credit to pay for those items or services you’ve specifically borrowed for (if applicable).
The next thing you can do is avoid invisible spending at all costs. This includes buying random coffees, presents, treats, going out for meals, nights out, etc. It’s good to treat yourself, but be careful.
Try and budget for fun or the occasional day out where you can. To stop depending on credit, the best thing you can do is balance your books – so, effectively, make sure your income outweighs your outgoings.
Budget for the Coming Months
Budgeting is the number one best way to ensure you have enough money for the coming months. It’s not always easy to financially prepare for emergencies, this is why most people turn to quick loans or credit cards, but be sure to keep an open mind.
Take time to consider your regular expenses, from bills and subscriptions to transport, food, and any spending money you may need along the way. Consider quarterly bills and events that may be coming up, too (such as water rates, birthdays, and celebrations).
Planning ahead – as much as you can – may help you to climb out of credit dependency bit by bit. It’s not a super-precise science, but the further ahead you plan, the sooner you can cushion your fall, so to speak.
It is always best to round up your numbers higher than lower. At best, you will have some extra money by the end of the week or month. At worst, you will have to use it all, but at least you know you will have what you need if you need it.
Save Where You Can
Whatever money you have left over, even small change, should be saved wherever possible. Even squirreling away a few pounds here and there will go a long way if need be, and you’ll start to lessen your dependency on credit.
What’s more, consider making your money travel that little bit further. Small change can be exchanged in supermarket coin machines for vouchers inside the shop, for example. This can help you to save a little bit on your weekly shop, and therefore step a little bit further out of debt.
Any money you have left over at the end of the month’s spending in your bank account should go into your savings pot. You will never regret having savings!
Of course, it’s a good idea to start paying serious debt off as a priority, or consolidate it so you pay less interest. If you can save a little money alongside paying into a healthy payment plan, then do so!
Bring In More Income
An obvious but not always easy solution for credit dependency is to increase your income. Of course, you could always negotiate your salary, but that is never a guarantee.
Instead, you can start by looking at easy ways to make extra money, such as working as a part-time driver, doing odd jobs in your neighbourhood, using coupon and cash back apps, and selling some of your unused items online (such as clothes, games, DVDs, kitchen appliances, utensils, etc.).
There are many ways to make a little extra money quickly – why not join the gig economy? Plenty of websites and directories let people create their own job listings for creative writing, art, music, and more. You never know what skills people may be willing to pay you for!
Preventing credit dependency means learning how to manage your money better. Even the best savers and careful spenders sometimes find themselves drifting into the credit zone – the trick is trying to get out of it sooner rather than later! Otherwise, you could end up paying a serious amount of interest, and you may find it harder to apply for more credit in future.
However, don’t get too stressed out. Adopting better financial habits can take some time, so give yourself a break if you don’t manage everything all at once! The important thing is to take the necessary steps to help yourself financially. Don’t blindly depend on credit – but don’t beat yourself up if you need to borrow here and there. It’s healthy to keep a regular check on your finances, and to potentially use credit as a safety net if you absolutely need it.
With the cost of living always on the rise, it is difficult to avoid being completely dependent on some form of credit. If you are trying to choose and apply for a credit card, for instance, make sure you’re doing your research for the best possible deal.
We’d recommend visiting websites like Citizens Advice or Money Helper if you’re looking for further information/help when applying for credit.