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How to Avoid Credit Card Debt |
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by: Debbie Dragon
Credit cards have become a way of life for American people. Plastic money practically surrounds us. We get credit card offers almost daily in our mailbox, see advertisements every day on TV or the internet and are offered to sign up for store cards practically everywhere we shop. We are a commercialized nation of people who want it now. We have to live up to our neighbors and wouldn’t be caught dead without the 60 inch flat screen plasma TV. Spending outside our means, no matter what our income, has become the norm. It is no wonder our nation is full of individuals who are drowning in debt that they have racked up on credit cards.
For young individuals just starting out, for those individuals who have been wise enough to not get caught in the credit card debt trap and for those that have worked hard to overcome debt or are in the process of becoming credit card debt free, there are some simple steps you can take to help you live a debt free life. You actually can use credit cards without racking up credit card debt as long as you have the knowledge and the will to do so.
The most important thing you can do to stay out of credit card debt is to manage your finances. This means setting up a monthly budget plan and not wavering from it. Determining your income and your expenses, and making sure your expenses do not exceed your income is all it takes. While it just makes sense to do this, very few people actually do.
Start by writing down your total household income and all your household expenses. Household expenses include your phone, gas, electric, cable and any other household bills. Budget into your expenses the cost of gas, groceries, gym memberships and any other expenses you have. Now subtract your expenses from your income. If you are in the negative you will need to rework your budget. Slash what you need to in order to come into the positive. It is also a good idea to figure in money for emergencies (if you don’t have an emergency fund) and money to put into savings.
Now that you have your budget set, you will need to stick to it. You can use your credit card for expenses, but never for more in any one category than what you have budgeted for.
When choosing which credit card to apply for and use, there are some things you should take into consideration. Make sure you pick a card without an annual fee. Check for one with lower fixed interest rates (just in case) and look into award credit card offers that would most benefit you. For example if you love to shop you could get a card that offers shopping rewards. If you love to travel there are a variety of travel reward cards to choose from.
Once you are using your credit card there are some other important tips you will want to follow. First, use your credit card as if you were spending cash. Never add extra items to your shopping basket and only charge what you truly have the money for. Plastic gives you lots of buying power, but use it with caution. This buying power is exactly what gets many people into credit card debt.
When you get your bill each month, check it over. When paying your bill always pay it in full so that you will not be charged interest. Finally, be sure to note the payment date and always pay your bill on time. Missing your payment date will add on fees, interest and cause your credit score to drop.
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Credit Card Articles > Credit Card Debt > How to Avoid Credit Card Debt
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