Credit and debt, how to manage them both
A lot of the time people get credit, and do not manage it well, and this leads to major debt. Other times people have debts, and use credit to try and alleviate the financial strain debt is to them. The process is not good. So, how can you manage credit and debt? Try the following:
First: Understand your credit. To use credit intelligently you need to know the terms of the card(s) you are currently using. If you do not know the card balance, terms, and rates, how can you properly manage your credit, or your debt? You can't! So, keeping track of your cards, their rates, and your current balances will help you to be aware of how you use credit cards.
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It is easy to get a better credit card than what you have, but not if you do not know what you have. Many companies are trying hard to compete with other companies, and so they offer things like no annual fees and low interest rates for an introductory period. So, take advantage of this, but now what the introductory period is so that you do not get screwed over by yourself when you do not pay off your balance before the rates go up.
Also know that credit card companies sometimes will give their introductory rates to existing cardholders so that they won't transfer their balances to another credit card company. So, if you love your card, and want to keep it, but need a better rate, or know of a better deal, then ask for it!
Second: Understand yourself. A lot of times you are aware of your rates, balances, etc. but what you are not aware of are your self defeating habits. If you want to properly manage both credit and debt, then do not get yourself a credit card if you have bad spending habits. No matter how good the rate is, if you can not honestly evaluate your spending habits, credit is not a wise idea. So, better manage your debt and credit by taking the time to examine your existing expenses to analyze how your money is spent. Then, identify any problem areas where you are more likely to spend too much or too readily with credit cards. These are the areas you need to focus on so that you do not get yourself into trouble because you have a credit card. If you find yourself looking at credit as free money, it is time to cut up the card.
Third: Make a plan. Based on your current spending practices, it is up to you to create a realistic budget to pay off your credit card debt. You will want to do this in the shortest time possible. While paying off debt, make sure you are not adding any more debt to it.
Fourth: Be wise with new debt. Using credit to purchase big ticket items such as a car, or a home is almost inevitable. So, carrying installment debt is pretty much a fact of life. However, occurring debt for not big ticket items makes no sense. Carrying credit card debt is usually not a good idea. So, only use credit on things that cost more then a month's worth of your salary.
Last but not least: A great way to manage both credit and debt is to go ahead and use your credit cards, but never spend more than you earn. If you can do this, managing your debt will become far easier and more rewarding.
