How to Avoid Credit Debt

Credit debt is easy to accumulate and hard to eliminate. In a society where everyone wants more and they want it now, it proves difficult to justify waiting, especially when it is so easy to whip out a credit card and say "charge it." Unfortunately, the charges add up quickly and the purchases sometimes wear out or are used up before the bill is fully paid. Educating yourself to avoid credit debt is the best preemptive action.

Instructions

1

Charge only what you can afford. If you don't have ready cash available, don't charge the item. Exceptions to this are necessary items such as medical needs and car repairs. Don't charge items that will not be around when the bill comes in. These items include groceries, restaurant meals and movies.

2

Evaluate your needs versus wants. It is tempting to see an item and not want to wait until you have the cash to pay for it. Determine if the item you want is a necessity to life or simply a desire.

3

Pay your bill in full each month. This simple step saves you interest fees and keeps your credit card open for emergencies.

4

Pay on time each month if for some reason you are unable to pay the balance in full. You avoid late fees and the possibility of over-limit charges by making sure to make your payment before the due date.

5

Review your credit card statements regularly. This helps you to catch any fraudulent charges, excessive fees or mistakes in a timely manner and before damage from unauthorized use affects your credit.

6

Keep only one or two cards for necessary purchases. The more cards you have, the harder it is to keep track of your purchases. Choose cards with the lowest interest rates and fees.

7

Create a budget. List all expenses versus income and determine to live within the budget. If there is not adequate income to cover your expenses, consider eliminating any unnecessary expenditures and reducing expenses where possible. Alternatively, a second job may be necessary.

8

Switch to a cash-only method of living. Set aside enough money from your pay each month to pay all expenses, such as groceries, personal items and eating out. Label envelopes for each expenditure and place the correct amount of money into them. Plan your purchases carefully. When the envelope is empty, put your "wants" on hold until the next month.

9

Teach your children to live within their means. Allocate a set amount of allowance each month. Explain that when they spend their allowance, there is no more until the next month. Suggest they get a part-time job if they need more. Stick to it.

10

Avoid cash advances. Instead, write a check or go to the bank and withdraw the money. Cash advances are convenient but come with higher interest and transaction fees.