How to Stay Out of Debt

A little common sense and planning

For people who have trouble sticking to their budget, credit cards can often be bad news. Some people see credit cards as a way to enjoy now and pay later, while others consider a card with a $10,000 limit to be the same as carrying a roll of cash around in their pocket. There’s nothing wrong with this, as long as you can realistically handle the payments without racking up astronomical interest fees. Below are a few tips that may help you keep your debt down.

Plan a Budget and Stick to it

You may want to do a little math work and plan a monthly financial budget. If you know exactly how much spending money you have, it will help you stay within your means. However, a budget is useless if you just ignore it.

The Right Credit Card

One of the first things credit card users should do is make sure they are using the right type of credit card for their lifestyle. Try to find a card with a low interest rate and no annual fees, and don’t pay for features that you will never use. This means you shouldn’t be lazy when looking for a credit card. Do some comparison shopping to seek out the best deal as it could save you thousands of dollars.

No Cash Advances

If you are having trouble paying off your credit card bills, one of the worst things you can do is take out a cash advance on another credit card to pay off your debt. Cash advances can be very costly as there is usually a fee per advance, and the interest rates are also quite high compared to regular purchases. The interest also kicks in right away as most card issuers offer no grace period on cash advances. Taking a cash advance will just sink you deeper into debt.

Zero Percent Balance Transfer Transferring your credit card debt to a zero percent balance transfer card is a good idea as long as you view this as a debt consolidation loan and don’t use the credit card for any new purchases. This gives you a chance to stop the bleeding with no interest for a few months while you try to cut down the debt.

Leave Your Card at Home

If you have a habit of buying on impulse, or are just an old-fashioned shopaholic, you should probably leave your credit card at home when you visit the mall. If you see an item you like, go home to get your credit card. If you end up back at the mall, go ahead and buy the item. However, you’ll find that nine times out of 10, you won’t think the purchase is worth going back for.

Surf the Net Naked

Well, you don’t have to take this literally, but while surfing the Internet, you should do it without any credit cards in your pocket. It’s all too easy to type in a few numbers to make online purchases these days, and there’s usually no going back after you click the mouse on the submit button. This is also a prime reason not to lend your credit card or number to anybody.

Common Sense and Willpower

If you’re in way over your head, you may just have to bite the bullet and live within your means. This means you’ll have to stop using your credit cards until you get some breathing room. If you can’t pay for something with cash, then don’t buy it. If you just can’t keep your hands off of the little plastic card, then you may want to cancel it.

Get Help

If nothing else seems to work for you, don’t be afraid to seek professional help. There are many debt counseling services out there and some of them are free. The Consumer Credit Counseling Service (CCCS) has chapters in most cities across the US.

Other Tips

  • Check your bills.
  • Keep your receipts and compare them to your monthly statements.
  • Pay with cash; use your credit cards as insurance.
  • Don’t give out your credit card to anybody.
  • Pay your bills on time to avoid penalty fees.
  • Pay your bill in full every month if possible.