Last week I talked about how to get out of debt, but that’s only half the battle. Staying out of debt can be tricky, especially if you’re used to spending on plastic (and not paying it off every month). Ultimately, your goal should be to spend less than you make on a consistent, long-term basis. You can use my Personal Finance Worksheet to track your spending, and use these tips to help yourself stay out of debt:
Choose one credit card for emergencies; cut up the rest. Look at all your credit cards and find the one that has the lowest APR, then cut up the rest. Yes, this includes all of those store-specific cards despite the fact that they send you coupons. (Psst, that’s their way of getting you back in their store to buy more of their stuff!) When you’re just starting to reform your credit-card spending ways, reserve your one card for emergencies only, at least until you have your emergency fund built.
Once you’ve established good spending habits, you can use a credit card that earns rewards for your monthly spending. Check out my recommendations for the best credit card reward programs here. But remember, if you are using a credit card for monthly expenses, you have to pay if off in full every month. No cheating.
Stop the flood of credit card offers. You don’t need to be tempted by juicy credit card promotions in the mail every week. Do not open them; recycle or shred them right away, envelope and all. Opt out of receiving the offers all together on optoutprescreen.com.
When you reach a goal, treat yourself. I mentioned before that setting goals is an important motivator. On the flip side, wholly depriving yourself of things you enjoy can feel demoralizing. While it is important to generally reign in your spending, giving yourself a small treat for reaching a goal can go a long way. Determine the reward when you set the goal, like indulging in your favorite Starbucks latte at the end of each month you hit your targets.
Once you’ve gotten out of debt and changed your spending habits to stay out of debt, you can focus on building your financial future.
Please note: I am not a financial expert and speak to financial topics from my own personal experience. Please consult a financial professional before making any of your own personal financial decisions.