Credit card debt has become so common these days that it almost seems like a certainty to those that are starting out. Even seasoned financial veterans find themselves occasionally sampling debt of this nature. When you first get started, everything is so easy and available. You can get several cards in a blink of an eye. Before you know what happened, you can be hip deep in credit card debt and feel as though there is no escape. Whether you are just beginning your financial life or you have been at it for a long time, there are some things you can do to stay out of the traps. Here are five solid tips to keep you above water:
Five Tips to Avoid Drowning In Credit Card Debt
Create and Maintain an Emergency Fund
Emergency funds are often overlooked when we sit down to do our budgets. There can be a million reasons why, but none of them are truly worthy. If you put back money for emergencies, you will be better prepared to not dive into your credit cards when things get tight. You are always better off borrowing from your own emergency fund than getting loans on a high interest credit card. Start an emergency fund and never stop building it. You will be glad later.
Identify Your Spending Danger Spots
We all have them and they are not always obvious. The best way to deal with this is start a spending log. Write down every single penny you spend for a month or two. After you do this, you will quickly see where your spending weaknesses are. This is the area that you should commit to never using credit on. These are the spending traps that can get us in trouble.
Skip Cash Advances
Of all the different things you might do financially, using a credit card to get cash is the most damaging. The interest rates are sky high and they almost always come with penalties. Before you know it, you will be swimming in credit card debt and fighting for your financial life. Keep the loans to low interest bank loans or your own emergency fund. Credit cards were not designed for cash advances.
Educate Yourself On Credit Terms
Many people get credit cards without even looking at the terms of the card. Do you have an annual fee? What is your interest rate? What are the payment terms? If you don’t know these sorts of things, you are doing it wrong. Some credit cards are horrific when it comes to penalties and fees. Not knowing this can quickly sink you into debt.
Always Focus On High Interest First
If you have several credit cards with balances, you should always pay off the high interest cards first. These will cost you the most money and should also be the ones you try to get rid of. Credit cards are awesome if you use the correctly and you keep them paid off. Try to get your cards to a zero balance and then pay them off each and every month. If you are unable to do this, you are overspending and will eventually find debt at your door.
Credit card debt is not always the end of the road, but it can certainly cause you some problems financially. If you find yourself in debt, start doing some of the things you see above as a start. You can and will climb out of the hole. If you are new to the financial scene, do these things from the start and you will avoid a ton of headaches!
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