Don’t Let April Showers Rain on your Debt – take steps to avoid bad debt now!
There are lots of reasons that lead us into debt. Sometimes it may be one major financial decision that can bring about a debt load that is uncontrollable. Other times, it may stem from a series of small financial mistakes or decisions that add up over time – or sometimes they may add up quite quickly and right before your very eyes.
If you are worried that bad debt may be looming, and you want to try and offset this occurrence, there are some relatively simple, yet effective steps you can take to reverse the situation and turn your finances around for the better – and before debt takes too strong of a hold on your life.
Avoiding Credit Card Debt
This first category may sound all too familiar to many of us. In our daily life, we use credit cards to fund a variety of purchases, small or large. Being aware of the signs of credit card debt, can be a first line of defence in steering clear of large debt.
1) Understanding Your Credit Card Terms
To exercise proper credit card manage, you will want to be sure to read or re-read through your credit card agreement. This is important so that you understand all charges included, such as, the interest charges, the annual fees, and other fees that may be charged to your card each month. If you understand the terms of your credit card, you are more likely to be able manage your card effectively and not in cur unnecessary charges that can lead to debt.
2) Charging only What you can Afford
This second point is perhaps the number one culprit that can lead to credit card debt. If you are unable to pay off your card in full – or at least the majority of the balance – you will be carrying debt month to month and this balance can also quickly add up. With that being said, if you can’t afford to pay with cash at the time – or at least have access to the cash the following month, then in instances like these, re-thinking these charges, some if not most of the time can shield yourself from a lot of unwanted debt.
3) Paying off Your Balance Each Month
To follow on the heels of the previous point, also in order to avoid debt you will want to pay off your credit card balance each month. If you continue to pay off your credit card bill in full you won’t be charged interest and your credit card balance won’t increase over time. Instead your credit card should be more manageable and free of debt. If on the other hand, you do carry a balance from month to month, then opting for a low interest card – to help reduce your interest charges each month will be more ideal. With high interest each month – it is easy for your credit card balance to creep higher and higher all the time – and soon enough it could be a debt that is just too large for you to pay off.
4) Not Missing Payments
Whether or not you carry a balance or pay off your bill each month, one thing you don’t want to do is miss payments. Even if you pay only the minimum balance, if you miss a payment -even once, this can negatively affect your credit history and this can become a more long term habit. Making sure to pay off your credit card bill each and every month can help keep your debt as low as possible, as well as keep your credit rating in better shape.
5) Discontinue Using your Credit Card
Lastly, if debt has accumulated and you can’t pay it off right now – then the best thing you can do is to stop using your credit cards. If you can stop using them even a for a little while, this will reduce the amount of charges that you will rack up. Also, if you can take a break from using your card until you are able to pay off some of the debt – then once again you can work towards keeping your debt in check and not letting it get too much to handle.
What Other Credit Areas Can Lead to Debt?
Taking a look at other areas of your credit that may add to more debt – do they include, a car loan, a line of credit, a mortgage? – and so on. Are you keeping on top of these payments as effectively as you can? If you are finding that you are falling behind on these, it may also be a good time to re-evaluate these expenses. Can you adjust your car loan some how, is downsizing to a smaller vehicle and option for you as a method of saving some money each month? Do you need to try and reduce your household costs? Cable, Hydro, Internet, Cell-Phone plans – can you reduce these expenses and improve your chances of avoiding too much debt? Ultimately, there are a variety of areas to pay attention to and methods to take in order to improve your financial situation and avoid accumulating debt.
Again, this will be a personal decision for everyone, as their financial situation, needs, wants, will differ. If you can create a plan to reduce your costs in a manner than makes sense to you, then you are taking the necessary steps to boost your financial health in many important ways.
Finally, you can look to financial advisors to help you learn more about how you can keep your debt at bay – and to help you avoid having April Showers put a damper on your finances this season.
