Avoid These Bad Habits to Keep Your Debt Under Control

Want to make sure your debt is under control -- not getting the better of you? Well here are 10 habits that lead to debt disaster from Money Central -- a list of debt practices you should avoid. Their list:

1. Misusing balance transfers.
2. Not checking credit reports -- you can't change them anyway.
3. Failing to alert creditors about a financial hardship.
4. Thinking of 'budget' as a dirty word.
5. Using retail store credit cards to make use of discounts.
6. Procrastinating on creating an emergency fund.
7. Paying bills in no particular order.
8. Charging purchases instead of paying in cash or with a debit card.
9. Making credit payments late.
10. Making the minimum payment only.

Yep, this is the list. Having coached many people in getting their personal finances straightened out, I can say that people who get into debt problems usually have several of these issues in their lives. And basically, the more you have, the worse off you are.

Want some ideas on how to deal with debt? See my post on how to get out of and manage debt (several links there are helpful).

Comments

[buhler]

I mostly agree with this list but have a question and a comment ...

Question: What is wrong with using store credit cards for a discount as long as the card is paid off and no balance carried. To me that seems more prudent as you are taking advantage of something offered which allows for savings.

Comment: Along the lines of the question above, we pay for as much as we can on our credit card as we get cash back for using it. It also gives us 30 more days for our money to sit in the bank and collect interest. Whereas if we paid cash or used a debit we would lose out on the cash back and the interest. Understand though that we do pay off our credit card entirely each month.

Darrell

[FMF]

Darrell -- On your question, click through and read the article for their explanation of why they think it's a bad deal. I used to take advantage of store card deals, but found it's not worth the time, effort, credit check, etc. for the savings -- at least for me and what I usually buy (for a big purchase -- maybe).

I too use a cash-back card and pay it off every month. I made over $300 last year doing this. See this post for details:

http://www.freemoneyfinance.com/2006/05/earn_money_with.html

[buhler]

I read the article and understand why they say it is a bad deal ... does not apply to us as we pay off balances.

I looked at this link, http://www.freemoneyfinance.com/2006/03/the_best_cashba.html and noticed that the card we use, the Dividend Select, is listed number 2. We avoid the $300 cap by having two cards, one in my wife's name and one in mine. When we reach the cap on one card we switch to using the other one for the rest of the year.

Darrell