by Maurie Backman | Sept. 2, 2020
The Ascent is reader-supported: we may earn a commission from offers on this page. It’s how we make money. But our editorial integrity ensures our experts’ opinions aren’t influenced by compensation. Terms may apply to offers listed on this page.
Here's how I've stayed debt-free.
When I first applied for a credit card, I was fairly young and a little nervous. The reason? I knew that having a credit card would open the door to temptation. At the time, I was a relatively broke college student with little income, and the bulk of that went to tuition.
Once I graduated college and got a real job, the idea of a credit card scared me less, since I knew I was in a much better position to manage it. But I'm happy to say I have never once carried a balance on a credit card. I've always paid my entire bill by the due date, so I've avoided throwing money away on credit card interest.
I pulled that off by sticking to a strict set of rules I set for myself early on. Here's what they are:
Some people take a look at their credit limit and think, "Cool! Now I get to spend this much and worry about it later." That's a bad idea. Rather than pay attention to my credit limit, I instead focused on what my earnings and bank account balance looked like. From there, I'd know that I could charge a certain amount and still pay it off when my billing cycle was up.
Some people rack up credit card debt because they spend recklessly. Others land in debt simply because life throws some nasty unplanned expenses at them and, without enough savings, they're forced to put them on a credit card. One thing my parents instilled in me was to always have money on hand for emergencies. So I've made a point of having at least six months' worth of essential expenses in my savings account.
Of course, I've had my share of unanticipated expenses -- home repairs, car repairs, you name it. But having emergency savings has helped me avoid whipping out a credit card and running up an unpayable balance.
When you pay for purchases in cash, you see money leaving your wallet. When you charge things on a credit card, it's not like you notice that a large chunk of your cash is missing. It's easy to let that kind of spending get out of hand. I've always made it a point to check my credit card balance every few days. That lets me know how much I've spent to date, and how much more I can afford.
Incidentally, checking my spending frequently has also helped me spot fraud early on. Last year, someone got one of my credit card numbers and spent $300 with it. I caught the charge while it was still pending, and got the merchant to cancel it before it went through.
Credit card debt isn't just costly; too much of it can hurt your credit score, making it more difficult and expensive for you to borrow money if you need to. If you're racking up credit card balances and losing money to interest payments, it's time to break that cycle. And if you stick to these rules, there's a good chance you will.
If you have credit card debt, transferring it to this top balance transfer card can allow you to pay 0% interest for a whopping 18 months! That’s one reason our experts rate this card as a top pick to help get control of your debt. It’ll allow you to pay 0% interest on both balance transfers and new purchases until late 2022, and you’ll pay no annual fee. Read The Ascent's full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.
The Ascent is a Motley Fool service that rates and reviews essential products for your everyday money matters.
Copyright © 2018 - 2021 The Ascent. All rights reserved.