Some debt may be necessary, such as borrowing for a home, or for college. Borrowing for things like vacations and meals leaves you with debt and little reward. Only borrow what you can reasonably afford to repay. If something takes longer to pay for than it lasts, don’t borrow money to buy it.
- Watch out for the minimum payment trap, as it could take years to pay off your credit card balance and you’ll end up spending a lot more than the original amount you charged.
- Only charge to your credit card what you can pay off at the end of the month. Don’t fool yourself into thinking you will pay it off next month.
- When purchasing a vehicle, be sure to shop wisely to ensure you get the best deal.
- Take a few days to think about a purchase before you follow through with it. This will give you time to decide if you really need the item.
- To reduce the total amount of interest you pay over time, pay off your higher interest rate loans and credit cards first. Then pay off debt with lower interest rates.
- Get help if you need it: reach out to a reputable debt counseling agency or talk to your bank or credit union.