Staying free of debt, what you should do

Staying out of debt is usu- ally a matter of good fi- nancial planning. It in- volves prioritising and understanding the difference between need and want. It takes some practice to establish good financial habits; many people manage to be debt-free by fol- lowing a few rules.

Spending less

Today’s easy credit tempts many into spending what they can’t afford. The golden rule is don’t buy something unless you are sure you can afford it. Know what your income is and what your bills are. “Cut off miscellaneous expenses. Make a budget and stick to it,” says Ikechukwu Iheagwam, a cash and liquidity management analyst at ARM. “Budgeting is a process of con- trolling the money one spends based on a monthly income. Keeping a budget, a detailed plan of how one spends monthly income will ensure that one does not spend more than one has. People who end up in debt often do not have a clear idea of where their money goes each month. The process of tracking spending involves keeping a record of every Naira spent,’’ said a public servant in an interview. ‘‘One can see what type of expenses that should be cut back on, and in turn save money.’’

Paying cash

Debit cards are handy but can make you spend more than you can afford. Pay cash if you can. If you don’t have the money, then you probably don’t need it. Experts say that paying cash puts one in control of expenses, as spending power will be a factor of the cash at hand.

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Buy on sale

Buying in bulk can be cost effective for a large family. ‘‘Take advantage of month end or festive period as products tend to go at discounted prices during these times,” an expert in the fashion industry said.

Pay off credit cards

Pay more than the minimum, and spend what you can pay off. “Break the habit of paying only the minimum required every month, as it prolongs the repayment period,’’ a personal banking analyst said. ‘‘The larger it takes one to repay, the more interest banks make and the less cash one would have,” the analyst added.