This is a guest post from Kris Bickell of www.debt-tips.com, where he shares tips for getting out of debt, saving money, and fixing your credit.
Years ago, in a world far different from the one we now live in, people only bought what they could afford. Then along came credit cards, and people realized they could buy whatever they want – and avoid paying until later. Sometimes much later.
Now, some people use credit cards much like a savings account. This can only lead to one thing – financial disaster!
Of course, credit cards are not evil “plastic” demons looking to overwhelm all those poor souls who use them. Many people use credit cards and pay off their balances in full every month. Others use them for rewards like airline miles, cash back bonuses, store gift cards, travel packages, and other fancy – or practical – rewards.
But for those of us who have fallen into the credit card “black hole” and are having trouble digging out – or for those who wish to avoid the black hole in the first place – here are some simple habits that will help you dig out from or avoid the debt trap:
- Shop around. Not just for the obvious things like clothing and groceries, but for big ticket items like TV’s and even cars. Also consider doing it when hiring someone to do home improvement, prepare your taxes, and for monthly expenses like car and home insurance (sometimes you can save up to $500 a year). If you pay for it, you can probably pay less if you’d just shop around. Also be sure to make friends with websites like eBay and Craigslist.
- Use your checkbook (or cash) when you buy things.
Sure, using a credit card is easier, and often safer. But if you don’t have the discipline to pay off the balance in full, you should avoid the temptation. If you don’t want to use cash or a check, then use a debit card connected to your checking or savings.
- Set goals. Get yourself a small notebook and write down all of your financial goals. Not just what you want to buy, but how much you want to save or how fast you want to pay off your debts. Anything dealing with money should go on the list. Next, write a target date for achieving each goal, and keep the list somewhere that you’ll see it often. That way you’ll be constantly reminded of your goals. Oh, and be sure to include whatever “fun” goals you might have, like saving for a big trip or other large expense.
- Ask yourself “do I REALLY need this now?” BEFORE you buy. I know, I know… This one isn’t much fun at all. We’re used to getting what we want, and getting it when we want it. But if you want to be responsible with your money, this is a great way to do it. Of course, the next question to ask is “can I afford it?” But you’re more likely to ignore this second question if you don’t tackle the other one first.
- Do it yourself. It’s much easier to go out to eat than to cook, or to stop at your local “fast lube” to get your oil changed, or to bring your taxes to a tax prep service. If you have the money to do these things, go ahead, and use your time for something more valuable. But if money is tight, learn how to cook, change your own oil, fix broken stuff around the house, and do your taxes. It’s not always easy, but it will save you some money!
So there you have it. These tips are so simple that anyone can do them. And before long, maybe they’ll even turn into habits. In the short run, you’ll save a few bucks. In the long run, you might just save yourself a LOT of financial stress!