The Steps You Can Take Toward Financial Freedom

By: Rachel Yoshida

Taking care of your credit card debt is one of the most important steps that you can take that will get you closer toward financial freedom. Not many people who do not have credit cards can understand just how quickly this debt can mount up and I was among these people before I obtained my first credit card around 3 years ago. Over the past 3 years, I have probably spent at least $10,000 on both of the credit cards that I have today and have carried a balance on both, even though I swore to myself when I was approved for them that I would not allow this to happen.

As resolved as I was to not let myself become one of the masses of people who let their debt to the cards get carried away, I have almost become one. I have a few tips, though, that have helped keep my credit score at a good level and have kept my credit in good standing since I opened these accounts.

The first tip should be obvious, but it is the most important one you can learn. No matter what, do not allow yourself to be late on a credit card payment. You should never pay just the minimum payment unless you absolutely have to, but even if the minimum payment is all you can make, make it. Missing credit card payments not only costs you extra money in the form of a fee, it will hurt your credit history.

The second thing to remember is to try your best to keep your balance below 30% of your overall credit limit. This will keep your payments as manageable as possible every month. Your minimum payments will remain low compared to what they will be if you allow yourself to put over that amount on the card.

The third most important thing is to realize just how much small purchases can add up over the month. You may think that hesitating on buying that new video game system is a great idea and while it probably is, the small items you purchase every day can hurt you just as much because you do not feel the pain of the purchase. Spending $20 or $30 every week on trips to the bookstore, the coffee shop, fast food joint, or anywhere else can really hit your wallet at the end of the month. Be careful.

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