With a new year dawning, it’s time to
establish a relatively clean start. Whether or not you have old credit card
debts, it’s best to make a conscious decision to avoid accumulating new debts
in 2014.
While some may argue that incurring
credit card is unavoidable, a measure of self-control and discipline goes a
long way in allowing you to maintain your finances in a manageable state. Here
are a few ways in which you can stay debt free (relatively) this 2014:
1. Lessen Credit Card Use
This is a no-brainer. While a more
obvious answer would be to not use your credit card at all, we all know that
that is not a realistic course of action. After all, credit cards exist for a
specific reason. What is realistic is controlling your credit card usage to
avoid overspending. Use your card only when it is the only option available,
and even then mentally weigh if using your credit card is actually necessary.
Lessening your actual use of the card lessens any possible debt you might get.
2. Prepare for Emergencies
Set aside some money so you can have an
emergency fund. By having money prepared for unforeseen events and
expenditures, you can dip into that emergency fund instead of reaching for your
credit card.
3. Charge Within Your Means
If you do need to use your credit card,
then use it for transactions you know you can afford. Keep in mind how much
you’re actually purchasing and be sure to pay for your credit card bill in a
timely manner, avoiding penalties, and interest fees.
4. Always Pay in Full
Credit card debts accumulate when you
constantly have a balance that’s carried over in the following months. Make
sure you place yourself in a state wherein you can afford to pay your monthly
bill in full in order to avoid being burdened by long-term debts. Always be aware
of what you have to pay and manage your finances accordingly. Remember, huge
debts sometimes begin with small but neglected debts.
5. Try to Avoid Taking Out Cash Advances
Cash advances are very convenient, and
that is why credit cardholders have a tendency to overdo them. Remember that
just because you have the option to take out a cash advance doesn’t mean that
you have to take that option. A cash advance is simply you borrowing money, and
that results—obviously—in debt. Work on your financial situation to ensure that
taking out a cash advance will never be necessary. (The aforementioned
emergency fund is a great way to do this.)
6. Be Careful With Who You Allow to Use the Card
Some people are in credit card debt
because someone else overused their card. This is something you can avoid
simply by either being careful with who you give access to your credit card
account, or just by simply not allowing anyone else to use your card.
7. Understand Your Credit Card Account
Ignorance is never an excuse,
particularly when it comes to money. When you sign up for a credit card, that’s
a financial commitment, and it’s your responsibility to know every detail of
every term and condition that financial commitment has. In order for you to not
be straddled with credit card debt, it’s always best to know what you’re
entitled to and what you’re responsible for. That way, you know which mistakes
you cannot afford to make when it comes to your credit card usage.
All in all, just be responsible with your
credit card use and credit card debt would be the least of your worries. By
taking the initiative to avoid credit card debt in the coming year, you can
ensure yourself a more financially stable 2014.
Note: This is a guest post by Money Hero, a Hong Kong’s leading financial comparison website which helps its readers to compare a broad range of financial products online - from credit cards to insurance plans.
