Avoiding Credit Card Debt In A Rough EconomyOctober 5, 2009 - 1:46 am
It wasn’t until the 1960s that credit cards became available to the average consumer, but now almost everyone uses them. These days, many are wondering if it’s possible to avoid credit card debt in the current rough economy. And it is, if you are willing to put in the required work to avoid it. Some steps involve having a budget, living within your means, having an emergency fund to pay for an emergency “� rather than using a card, paying your card off in full monthly and using your credit card like cash. If you use credit wisely, you will have a high credit score.
Noted financial expert Dave Ramsey says one of the smartest ways for people to stay out of credit card debt is to have an emergency fund. If people set aside this money, they can use it to take care of unexpected expenses, rather than using a credit card. To set up this fund, he counsels people to have $1,000 in savings before their debt is paid off, and three to six months of income afterward. He says the money for the emergency fund can come from working overtime, selling items on eBay or at a garage sale, or finding a temporary second job until the fund is established and debt paid off. One should also save what he can regularly, even if it is as little as $5 a week.
Another way to save for an emergency fund and help you stay out of credit card debt is to set a budget for you and your family, and stick to it. You might find you can limit the junk food you buy, take your lunch to work instead of buying it, buy clothes at a discount store, and purchase generic food items. You might be amazed when you calculate your monthly income and expenses at how much you spend on certain items and how much could be saved. There are a lot of online sources that can be found easily that will help you prepare a budget, or you can just do it with a pencil and paper.
In addition to setting up an emergency fund and spending wisely, there are several other ways to ensure a stable financial future. Many online financial websites counsel people to simply pay off their credit card debt in full every month, not only keeping them out of debt, but also eventually raising their credit score.
The path to being credit card debt free and raising your credit score is primarily being fiscally responsible and saving for a rainy day. These are just a few of the ways out there to do that.