How to Stay Out of Debt
To acquire credit, there are many alternatives then opening a credit card or a line of credit. A lot of people always say well I have to have at least one credit card even if I keep it paid off to have a form of credit, but this is absolutely not true. First off, having any type of credit card, no matter how good you are at budgeting and finances, is allowing you some type of 'just in case' or 'i have my credit card' which are both scary 'freedoms', which thus can be very tempting.
If you have a car, you must have auto insurance. By keeping up to date and not letting your car insurance expire, you have creating a direct line of credit and thus creating good credit for yourself. In addition, if it's absolutely necessary (meaning you are incapable of paying cash for your car), a car payment can also help your credit. Remembering with any type of bill you do acquire, pay off more than the minimal, and pay the ones with the highest interest off first, and then lower. The idea of being debt free, is never creating debt, or if you are in debt, to get out as soon as possible.
Another trick to staying out of, or trying to eliminating your debt is savings. Yes, savings. It may not make sense at first if you are setting aside of each of your paychecks when you have bills to be paid, however it has been proven that those who set aside at least 10% of their check, are eliminating problems that could pursue in the future, such as an unexpected problem with the car that you don't have the money for, you or a family member getting sick and having to make an unexpected trip to the doctors office, etc. $1,000 is the magic number to have set aside, but if you were to put away 10% every paycheck, after you have accumulated the $1,000 you could have be making money on your money by putting your savings into high yielding savings accounts.
Whatever you do, or your plans may be, remember the smartest thing you could ever do, is not get into debt to start with.
Published by Blair Hill
Just trying to make my place in the world a little bit better. View profile
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How to Stay Out of DebtTips for staying as debt free as possible.
- How to Get Out of Debt.
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2 Comments
Post a CommentQ: how to get out of debt?
A: don't get into debt
Not very informative of an article.
I find a good way to build credit and not be tempted by credit cards is to visit your local bank you do service with for checking / savings. And ask to open up an installment loan, save up $500 - $1,000 to secure the loan in savings. Don't spend the money on any thing, just use it to repay the installment loan as scheduled, don't pay it off early. Follow it out to the end. When you are done, you get the savings back again. I would suggest opening up another installment loan and repeating as many times as you need to build up credit. Anyway installment loans are better than credit cards. I helps you get approved for other types of installment loans like Auto Loans, and Mortgage Loans. Thanks for sharing.