How to stay out of debt.
Step one: Never put more on your credit card than you can pay off in full by the next due date. The interests on these accounts are high. You could easily buy something twice or three times before paying it off if you only payed the minimum payment amount each month. With new laws on the books some people will be unable to declare bankruptcy on this type of debt. This could keep you in debt until the day you are dead. There will be nothing you can do about it. That isn’t the kind of debt you want.
Step two: Check your credit history once every year. This is free at each of the three reporting agencies. You will need to go to each of their websites in order to make this request. Millions of people have errors on their credit history and if you are not checking it how will you be able to correct it. Errors on your credit history are the leading cause of credit denial and inflated credit interest rates. These errors alone could cost you hundreds of thousands of dollars over your lifetime. Now I ask you is the three to four hours a year worth your time now?
Step three: Do not barrow money for anything besides a Car ( transportation to work ), House (Place to Live), or an Income Producing Asset. Yes, I know you want that boat… I mean yacht. If you are not going into business renting out the yacht or pleasure cruse then pay cash. The cost of the up keep is huge from what I have heard.
Step four: Once you find out the payments of any of these loans ask yourself this one simple question. Can I make at least 50% bigger payment than is required of this loan? If the answer is no stop this loan is too big for you. If the answer is yes then you need to set up a payment plan for yourself to do just that and pay 50% more every month to this loan. This will not only save you money on interest but it will also keep you from taking on too much debt.
Step five: Remember that no one cares if you get into too much debt. Sales people do not care about you. They want your money. The banks do not care about you. They want your money. You are on your own and when you learn this you will be far ahead of the debt trap.