In all honesty, every one of us has a dark side. We tend to indulge in spendthrift behavior from time to time. These bad habits can prove to be quite the problem and if you are a credit card addict then you may probably fall into credit card debt. However, there are a lot of good financial habits that one can incorporate in their personal lives to save money.
1. Tracking your expenses – One of the most important things to do is track your expenses. If you consider the life that most of us are living, paying back credit card debt can take years, even with a low interest rate. You need a lot of self control and need to incorporate a good set of financial habits into your everyday activities so that you can improve your financial health.
2. Don’t overspend – The worst thing one can do is overspend your hard earned money, even if it is for a personal belonging or a gift. Overspending via credit cards allows more interest to be charged on your bill hence cumulating your credit card debt.
3. Mortgage payments and refinancing – One should pay attention to mortgage payments and should consider refinancing if the interest rates start to spike. Even if you have bought the home, your focus should be on interest rates because if these rates drop then you can refinance your house on a cheaper rate and reduce your mortgage payments for the future.
4. Remove impulse buying – Impulse buying is one the worst habits for your salary. Even if you don’t need things you will end up buying those items. One of the major and foremost reasons why people fall into credit card debt is this phenomenon.
5. Save more by keeping less in your wallet – when you have money in your wallet you tend to spend more. Keep less when you travel so that you have control over your expenses. This will not allow you to make big purchases even though you may desire that certain product.
6. Set up an emergency fund – It is always an excellent idea to setup an emergency fund. This could be a separate bank account, bonds, securities or even stocks. If you manage an emergency fund you will never be in the position to go for a load on fall into any financial risk, e.g. credit card debt.
7. Budget wisely – When your salary arrives, it is necessary that you sit down and budget your expenses and resource allocation for the month. By incorporating a few major cut backs and taking your time to plan your daily expenses it may save you a hefty sum every day.
8. Read you contracts clearly – Most people come under pressure or are intimidated by the length of contracts. They tend to quickly come into accord and sign the contract. If people read their contracts and then signed them, they would be aware of hidden charges or other limitations that would prove to be hazardous to them.
9. Throw away the plastic – if your problem is credit card debt; do not annul your credit cards as that will harm your credit score and your overall credit rating. Instead have someone close hide them so that you may not be able to use them. If that doesn’t work simply cut up your cards, when it is cut, they cannot be used and you can’t further add to your debt.
10. Exit strategy – You should keep in mind an exit strategy when you are investing capital. If you have not planned this it will be very difficult to pull out your investment when things get rough.
You should ensure that after costs you pay yourself as well. And your payments are in perfect schedule. Avoid payment stacking to occur. Credit card debt causes your credit ranking/score to go down and hence you may find difficulty in securing a loan if your credit score is poor. Once your debts and payments are settled you score will rise again.
Credit card debt in the US is a amongst the highest worldwide.