Credit card debt is something that millions of Canadians struggle with. It’s like a vicious cycle that never stops, unless you of course can get rid of the credit cards. However, it’s no secret that emergencies happen and sometimes those credit cards can be a lifesaver. Check out these tips for avoiding credit card debt this year.
Tips for Avoiding Credit Card Debt
Use the Envelope System
If you have never used the envelope system, it’s basically a bunch of paper envelopes, nothing fancy. You create a budget and use the envelopes as a way to hold the money for your various budget areas. For example, you might leave $50 for eating out for the month. That $50 would go in your eating out envelope and once it’s gone it is gone.
Set Up That Emergency Fund
It’s absolutely nearly impossible to stay out of debt if you’re not able to pay things off when they arise. Start setting up your emergency fund now, so you can stay out of trouble later. It’s recommended that you have at least three months of living expenses saved up, but you can do what you feel is best for your situation.
Cut Up the Credit Cards
Of course one of the most common sense ways to avoid credit card debt is to cut up the credit cards. Instead of relying on credit cards, you can build up a savings. Having your emergency fund in place will help you avoid using a credit card when emergencies arise.
Avoid Big Purchases
Many people use their credit card to purchase bigger items that they cannot normally afford. Friends, this is called living above your means. You probably don’t need a new television or a bigger bed if you cannot pay cash for it. Sometimes avoiding these big purchases can help you be thankful for what you already have. Instead of using a credit card, start saving cash for your next purchase.
Don’t Put Someone Else on Your Credit Card
For some reason there is an option that allows you to put someone else on your credit card. This will rack up your credit card amount fast. The only one who should have access to your credit card is you. If your credit card gets lost or stolen, this can mean big trouble for your finances. If you’re trying to avoid credit card debt, it’s probably best to not put someone else’s name on your credit card.
Know the Details of Your Credit Card
There are some credit cards out there that come with a hefty price tag. They lure you in with their lovely interest rates and then pounce on you whenever the promotional interest rate is up. Always read the fine print to your credit card.
Do you have some credit card debt to work off this year? How are you going to accomplish that? What are your tips for staying credit card debt free?