How to Stay Out of Debt

Video Transcript

"Hi, my name is Maria Enomoto from Consumer Credit Counseling Service, and today we are going to talk about how to stay out of debt. The best way to stay out of debt is to live below your means. You need to work out a spending plan that includes every single expense that you have and those expenses need to be recover by your income. So, this is the only way that you are not going to be in need of some extra money to cover from some living expenses. So, first thing it is work out a budget, work out a really detail budget that includes not only your grant expenses or expenses that you have every month, but also future expenses, such as taxes, such as insurance. Sometimes we don't pay that every month but we need to set aside the money just to make sure that we will have the money by the time we need to pay. Another thing that can include is any kind of gift that you probably will want to make, especially in Christmas time it is good to have a separate different budget because it is going to be a month that we will be spending more. The best way is to make sure that our income is enough to cover all our living expenses and also that we are paying for the debt that we have accumulated in the past. The good of staying out of debt of course is that we are going to be overwhelmed with all these payments that we have to make. But, if you can't skip payment of debt, that you need to apply for debt because of an emergency for example. Just make sure that the terms that you are going to have to pay off this debt, is something that you can afford with your budget. So again, we are going back to the budget and we need to include the amount that we are going to pay to the creditor, just to make sure that we are going to pay that debt off. Another thing that will keep us out of debt, will be to set aside some money every month. We need to go back to the savings thing and savings has to be part of our spending plan too. We must set aside some money out of our paychecks just to build some savings or emergency fund that we can use in case of any emergency or unplanned expense."