According to different studies, the year 2021 has brought the highest number of average credit card debt of one family. And that is $6,270. [1] Credit card debt is like a burden that you carry with you all your life. Once you start, there is no easy way of coming back. That’s why you should do everything that’s in your hands to avoid it. And we can help you with that. In this short article, you will learn six steps on how to avoid credit card debt.
Think about your future
You know the feeling when you see something in the shop, and you think that you just have to have it. The newest shoes, car models, or video games, are things that you will enjoy, but not when the hard times come, and you’ll find yourself in credit card debt. Instead, invest in your future, buy what you can afford, and use credit cards only for emergencies. Of course, dream big, but don’t let your dreams drag you into credit card debt.
Keep a track of your payments
Usually, people get into credit card debt by forgetting about their payment date You’ll miss one payment, but then the next month you have to pay double. But that’s impossible for most households. Plus, don’t forget when you miss a payment, the late fee will be added. That can be from $30-40. Try avoiding that by organizing the dates and payments. One way to do that is by writing it down somewhere you’ll see it.
Limit your expenses
Every credit card should have a credit limit, and it is advisable that you spend no more than 20% of it. But that won’t completely keep you from getting into credit card debt. Don’t rely only on credit limits, but be active and make a budget. There are multiple ways how to do it. The easiest and most effective consists of 4 steps:
- list down all of your expenses and divide them into categories
- compare it to your income
- look for which expenses you can limit
- create a realistic budget for each category
Don’t use multiple credit cards
Let’s put it this way. More credit cards equal more responsibilities. You may think that you’ll have more money, but the reality is that you’ll have to keep track of all the payments and transactions. And that’s impossible.
Read the fine print carefully
You want to know everything that comes with your credit card so you won’t be surprised later. Learn about late fees, default rates, interest rates, and more important terms. So your mistakes won’t cost you your financial freedom.
Recognize what’s a waste of money
It’s important to know what things are not important but cost you a lot of money. By limiting them you can be free from credit card debt and move forward. Some examples of things that you don’t actually need are apps for your smartphone or computer, cable TV, videogames, Amazon prime, water in plastic water bottles.
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