I suppose I should explain that the title of this post is technically misleading. Every time you owe anyone money, you are in debt. You cannot realistically avoid that. You’d need to grow or hunt for your own food, knit your own clothes, and build your house out of mud and sticks. And, even then you’d owe taxes on your land.
But, it is possible to manage debt. It is fairly easy. The simple thing to remember is you must figure out how you handle your debt before getting into it in the first place. If you’re going to apply for a credit card, do some reading and figuring. You want to know what you will do if you miss a payment. Also, you want to know what the credit card company will do, if you miss payments. You need a plan. If this happens, then that. If that happens, then something else.
In easier terms, you want to arm yourself with knowledge. Knowledge is power. Power over your debt is vital, if you want to keep it under control. You want to be sure you can pay off your bills before they arrive. Most people who have credit card debt got ‘sucked’ into the system before they understood it. Easy ways of paying your bills and making purchases. Why carry all that cash on you? Why count your money? Just swipe. Swiping is what has led to many a human being filing for bankruptcy. I’m not making this up. Check for yourself.
In my personal opinion, you do not ‘need’ credit. Credit leads to debt, which leads to headaches and misery, when things spiral out of control. Sadly, though, the system in some cases requires you to use credit. Some kinds of big purchases involve a credit history, even if you’re not using credit.
So, how do you maintain credit and not sink deeply into debt? Simplify things. If you must have the convenience of swiping for purchases, consider a pre-paid debit card. If you absolutely need credit, do not get 3 cards. Get 1 card. Keep that 1 card under control. If you make payments and keep everything tidy, the credit card company will probably increase your credit line over time. Do not go crazy. Baby steps. But, remember, it is *BEST* if you can make purchases without using credit cards. Sure, you won’t boost a credit rating without using one, but that’s mostly a patch of quicksand waiting to drag you down.
What most people do not seem to understand is that if you saved your hard-earned money, and let it build up, you could pay cash for almost any purchase you make. Even a house or a new car. Cash is king, because it is actual ‘right now’ money. It doesn’t need to be approved by a third party. It doesn’t need to be signed and verified. I strongly urge anyone and everyone, wherever possible, to pay cash. Another advantage to cash, it’s right in front of you. When you run out of dollar bills and coins, your shopping ends. You can see how much you can spend with your own eyes, and you can plan your purchases out directly. If you don’t have the money with you, you can’t make impractical purchases. It simply can’t be done. But, with a credit card, it might allow you to make a purchase you didn’t realize would be too big. That’s where control comes in. It is dirt simple to control cash purchases. It is much more complicated to reign in credit card spending. That is why I suggest 1 card, if you must have one, and no more than that.
As always, if you have suggestions, questions, or critique, please post a comment.