Learning to avoid credit card debt and saying ‘no’ to yourself and unnecessary wants will keep you on the road to overall financial health.
Avoid Credit Card Debt
Credit cards are a great financial resource when used responsibly. They can also be the source of financial distress when used irresponsibly. The most important tip to ensuring your credit card is a resource to you, and not a distress, is to pay off your credit card balance at the end of every billing cycle. A second tip is to avoid using your credit card for a cash advance.
Cash advances are very expensive because they automatically carry a higher interest rate on the amount borrowed. These also include transaction fees and have no grace period for repayment. You may borrow $X amount, but you will be paying back much more than the initial amount borrowed.
A second tip for responsible credit card use is to not charge items that you cannot afford. Generally, if an item(s) can’t be purchased with cash, that item(s) will be the cause of overspending.
Differentiate Between Needs and Wants
The second piece to avoid when trying to become financially healthy, is saying ‘yes’ too much. Be sure you are not overspending because you are saying ‘yes’ to unnecessary wants all the time. In this aspect, learn to say ‘no’ more often. Teach yourself what the difference between a need and a want is. This will help to keep you on track with your financial goals.
View the complete 4-Part Healthy Money Habits Series:
• Part 1 – Pay Yourself First
• Part 2 – To Be Avoided
• Part 3 – Insurance and Retirement
• Part 4 – Financial Maintenance
• Healthy Money Habits Series Wrap-Up