How to Avoid Debt

Paradoxically, the increasing economic growth and prosperity is raising the levels of debt. With the modern trends and the financial institutions making it so easy for clients to borrow, there are bewildering possibilities of getting into debt. It is easy to get into debt but certainly not as easy to get out of debt. Even the financial institutions that will be more then willing to lend you whatever you may ask for as long as you qualify will do very little to help you get out debt once there. If you are lucky, your lender can write off some loan dues to make it easier for you to repay the loan. Bad debt write off will usually result if the debtor is bankrupt.
Here are some ways to avoid debt and live a stress free, debt free life.

Live within your means. There is a difference between human needs and wants. Before buying, give each item a score. Impulsive buying is the best way to buy things that you will later come to realize that you do not necessarily need them. On the same note, buy what you can consume and avoid wastage both in what you buy and how you use any utilities and amenities in your home.

Avoid overusing credit cards and instead often buy using cash. Buying with cash is the best way to limit yourself when out shopping and such will ensure that you only get what your money can buy. Let credit cards be for emergencies.

Learn how to manage your debts and always ensure that you keep to your monthly debt obligations. There are times that you will find yourself in situations that will force you to borrow. When inn such circumstances, it will be easier for you to clear your debts if you consistently provide your loan payments.

If you find yourself overburdened with debts, here are some debt reductions programs that your lender can use to help you get some debt relief. The programs include bad debt write offs, bad debt expense, allowance for bad debt and bad debt provisions. A bad debt write off is simple a reduction in earnings or value of assets by the amount of loss or expense. For example, if you make a sale to a client on credit but after sometime the client gets bankrupt and thus is unable to pay for his debt, then you company will have to write off the debt and have it recorded as a bad debt expense.
Bad debt expenses can be defined as entries found on an income statement of a business which represents the noncollectable accounts receivables occurring in a given period of time. In many cases bad credit expense will be a result of a debtor not being able to fulfill his debt payment obligation on outstanding debt either due to financial problems or bankruptcy.

A bad debt provision is the amount of money that will be shown on financial statements which represent the amounts that were previously classified as receivables but which will most likely be written off. An allowance for bad debt can be considered as any valuation account that is used to estimate a loan’s portfolio which will be most likely be uncollected.
Your lender will only use these if and only you will show substantial proof that you are not able to pay off your loans. However, it should be remembered that, even with these, you are not guaranteed a 100% loan relief and in many occasions, the payment will only be reduced to make it more affordable for you.