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The entire world, especially Euro-zones and USA are suffering from recession, and consumers are in fatal debt-trap, which is now out of control. Increasing unemployment is further fueling this agony, leading to miserable pressure on the consumers, and they are unable to find ways to get rid of this situation.
Prevention is better than cure; the financial health of the consumers needs prevention; by taking a few preventive steps to tackle the present situation, we can protect our tomorrow from this misery of debt. This will give an opportunity to the consumers to spend life happily, rather than in difficulties and tensions. Most of the loans are taken through credit cards. This type of loan started around 1960s, and now it is very common.
Credit cards are mainly promoted through advertising, and many surveys confirm that consumers are influenced when they are exposed to repeated advertisements everyday. In the past, people were in the habit of trying to save for the rainy days, but presently, due to floods of advertisements, consumer behavior is shifted to satisfy the desire of the moment. Credit cards give the purchasing power, which is temporary, and this temporary desire gets satisfied very easily when one has a credit card in hand; this action leads to continuous debt clutch.
First step is to get out from the seduction of advertising impact, and try to understand that all credit card companies are in action to make consumers their slaves. Consumers should take command to lead happy life without taking any loans. Secondly, a strategy should be made to find out how credit cards can be avoided. The key point is that consumers should develop a balance between expenditures and their monthly incomes. Thirdly, consumers should keep 10-15% amount for the emergencies, and this amount should be kept in short-term savings.
Budget planning is a very essential; All the expenses should be planned according to the income. If consumers feel any difficulty, they can take help from CCCS (Consolidated Credit Counseling Services) after setting the budget. The next step is to stick to the budget plan. Its reward is very fruitful; hence, this habit should be developed by the consumers. Initially, it might seem to be a very hard task to perform, but after getting used to it, lives of consumers would be like a living paradise.
A habit should be developed to save up to 10% to 15% of income each month; and consumers should cut down all the extra-expenses. Credit cards should be only used in case of extreme emergencies and lack of cash, but the transaction should be monitored afterwards, and its limit should be up to 30 percent. After usage, this amount should be paid back as soon as possible, from personal savings.
Try to avoid carrying credit card with you during shopping because credit cards can expose you to temptations. It is better to keep cash in your wallet; This ensures less expenditures and only needs to be met.
Prevention is better than cure for better financial health, and these preventive habits must be preached to all the family members, friends and colleagues and especially to youth. Youth should be well aware of the demerits of using credit cards.