As American’s we love to buy things and spend money, and most individuals and households have at least one credit card. Credit cards are convenient and easy to get, but they usually come with a high-interest rates, and if not used responsibly they can put you in a mess of debt that’s hard to get out of. We will go into to detail on debt and how to manage your personal debt.
Some debt is considered good debt, like taking out loans for education or borrowing to buy a home. It makes sense not to borrow more than you need and to shop around for the best rates.
Bad debt, for many Americans’ is debt you rack up on credit cards. When we go into debt to pay for things like meals and going to the movies, they seem like small priced items at the time but they add up fast. You should only pay for these type of items on credit if you plan to pay off your balance in full every month.
Being Aware of What You’re Spending
It’s easy to buy things without giving it much thought. Start tracking where you’re spending your money and where you can cut back on spending.
Pay off Debt with the Highest Interest Rates First
Examine all your loans and credit card balances and pay down the ones with the highest interest rates first. After you tackle one, start paying off the next highest interest rate loan.
Build an Emergency Fund
Have enough money set aside to pay for a least 6 months’ worth of living expenses, in case you unexpectedly get laid off or a medical condition arises.