Avoid Credit Card Debt Like The Plague: 7 Ways To Keep It Away

Dealing with tons of debt is like carrying a very heavy stone on your back while walking uphill. Many persons around the world are facing this situation nowadays, and it is all due to the irresponsible and abusive use of credit cards.

However, if you stay here to read this article, then you will learn how to use them correctly and as a result avoid debt.

Let’s check what we have in store for you, because if you want to be a responsible credit card holder, then this is the article you must read right now!

1 – Understand Credit Utilization:

Let’s suppose you have a credit limit of $5,000 USD and you spend $4,000 USD of it. Then, your credit utilization would be a staggering 80%, which is excessively much and it will hurt your credit score.

Many new cardholders believe that they can spend all of their credit without problems, but truth is that it is one of the most damaging things for your credit profile.

Our recommendation for you is to keep your credit utilization between 30%-40%. That is ideal and it will make your credit score look great.

Moreover, you can also pay your balance twice per month, so that credit bureaus see an even lower credit utilization. These little tricks will yield great results, so use them, because life is much harder with a deficient credit score.

2 – NEVER Take Cash Advances:

Do you want to know a quick way to send your debt through the roof? Then take cash advances and you are set for big problems. You should NEVER do it, because the interest rate fees will eat you alive.

Not only that, but in the majority of time there is no grace period and you will have to pay transaction fees as well.

Do not think that if you pay on time you will not have to pay the interest fees, but in any case you will have to do it. So, again, avoid taking cash advances like the plague, because they will accumulate you debt.

3 – Your Budget Is Crucial:

We put a brief explanation of what credit utilization is and why it is dangerous to go over 30-40%. However, it is very hard to do without a budget.

The first and most important rule: do not spend more than you can afford. It is easy to spend on things that you cannot afford with cash when you have a juicy credit limit, but remember that going over it will create many debt problems.

Do this and you will not create debt, because you will not spend over your limits while keeping an optimal credit utilization (to protect your credit score). You can read more about how credit cards affect your credit score here: https://www.marketreview.com/credit-cards/.

4 – Don’t Own Many Credit Cards If You Don’t Need Them:

Another way to damage your credit score is to own many cards and hold small balances. This will hurt your profile even more than a bigger debt with just one credit card. Therefore, if you do not really need them, then avoid having many credit cards, because the disadvantages will surpass the benefits.

5 – Pay Your Full Balance Punctually:

People accumulate tons of debt when they fail to pay on time and their full balance. If you do not want to be part of that unfortunate group, then commit to paying in full and on time.

The principal reason on why people fail to do so is because they do not have a budget, and therefore, they cannot control their spending. Furthermore, they worsen their problem by taking cash advances, overspending their credit limit, etc.

6 – Never Share It:

This is another great piece of advice: never share your CC. Some relatives or friends may request you to lend them your credit card, but you should never do this because they may not fulfill their promise of paying back. If that happens, then you will accumulate debt and you will end up paying much more.

7 – Recognize If You Have a Debt Problem:

If you have a debt problem, then be quick to recognize it, because the longer you wait the worse it will turn.

If that’s your case, and your credit score is already suffering the consequences, then here are some tips you can use:

  1. Pay your smaller balances and reduce your number of credit cards
  2. Request a higher credit limit and reduce your credit utilization
  3. Commit to paying on time and negotiate your debt

Closing Down:

Now you know how you can avoid accumulating credit card debt. You are ahead of the majority of people who are not responsible with their credit cards, and hence, in a more favorable position for using them correctly.

 

Escaping the Wrath of the Debt Demon

Wouldn’t it be nice to simply erase debt from your life? The problem with debt is that it is all-encompassing. It is not related to your financial life alone – it affects your social interactions, emotional well-being, and your livelihood. Debt places tremendous strain on all aspects of a person’s life.

This is precisely the reason so much emphasis is placed on debt management, debt mitigation, and debt consolidation. Several interesting statistics have been revealed vis-à-vis household debt in the United States. According to the Federal Reserve Bank of New York, total consumer debt amounted to $12.73 trillion at the end of Q1 2017. This debt was comprised of the following components:

  • 4% – mortgages and home equity loans
  • 6% – student loans
  • 2% – automobile loans
  • 6% – credit cards
  • 9% – other forms of debt

Clearly, the growing consumer debt burden is troublesome. The more money that goes towards debt repayment, the less personal disposable income there is with things like savings, and investment. The current debt level has now exceeded the high that was reached at the end of Q3 2008 – the height of the global financial crisis. Student loan debt is one of the most troubling growth components of the overall spectrum, racking up significant gains since 2003 when it accounted for just 3.3% of all debt.

The current statistics validate growing concerns that US debt levels are rising sharply, a bugbear in the nation’s road to recovery. It should be remembered that the US economy is comprised of 70% consumer-driven GDP growth. Much of this is debt-fuelled growth, as evidenced by the rapid uptick in credit card debt and expenditure.

Many leading economists are growing increasingly concerned about burgeoning debt levels – and for good reason. After the global financial crisis, banks and financial institutions began to rein in their borrowing. It became increasingly difficult for individuals and businesses to be approved for lines of credit. Since 2013 however, the American tendency to borrow money renewed in earnest.

Debt growth has increased sharply with rising student loan debt, today at $1.3 trillion +. According to the Federal Reserve Bank of New York, some 10% of borrowers are behind on their student loan repayments. However, student loan debt is significantly less than mortgage debt which is over $8.6 trillion.

Is There a Way to Deal Effectively with Credit Card Debts?

The quick answer to this question is yes. Credit card debt is one of the most difficult forms of debt to pay off, because of the high interest rates levied on credit card accounts. However, there are multiple solutions to the credit card debt dilemma, notably the following:

  • Transfer balances from high-interest credit cards to low-interest credit cards – this is possible if the transfer costs are low enough to make it worthwhile, and if the cost savings on the new APR are worthwhile.
  • Consolidate your debt – debt consolidation options are always possible if you have similar debt such as credit card debt and you have not yet defaulted on your payments. Apply for a debt consolidation loan at a lower interest rate, and with affordable monthly repayments to defray the expenses of high APR credit card debt. You can effectively pay off all credit card debt instantly, and be settled with a low-interest repayment plan on your new loan.
  • Manage credit card debt effectively – it is preferable to use credit cards with low APRs, plenty of rewards, and high cashback percentages. If possible, try to pay the balance of your credit card debt in full every month. Revolving credit can become problematic when you are paying interest on your interest.

Your Mattress is Putting You in Debt

There are many areas of our homes that cost us money. There’s the lights, devices, and other electronic equipment left on when not in use, which drives up the energy bill. There’s the air conditioning that’s being used when all that’s needed is an open window and a fan. Then there’s the refrigerator full of food that will go bad because you eat out too much or over buy at the grocery store.

Did you know that your mattress can also be a great thief of your money? Of course, this all depends on the age of your mattress but if you are looking at a bed that is well over ten years old, there are ample ways this mattress is costing you money in places you didn’t even think to look.

Sneezing?

Dust mites live in all our homes and they particularly love camping out in our mattresses. For those of us that have allergies these little guys can cause a great deal of disturbance when we are trying to sleep. More than $17,000,000 were spent by Americans on health care to reduce the swelling of their nasal passages and sinuses in 2010.

Consider replacing your mattress to a type or brand that has been proven to reduce the amount of dust mites you will come in contact with. Take these steps to ease both your allergies and your medical bills. Memory foam and latex are great contenders while coiled seems to attract the most mites due to the spaces available inside. If you want to know more about latex mattresses, check out these reviews for the best latex mattresses on the market.

Pain?

This is another area of expense that could be greatly reduced with a new mattress. Old mattresses tend to lose their form or get the coils misshapen due to natural wear and tear.  You either get poked in the back with the misshapen coils or you don’t get the support that you need when you sleep. Your shoulder and hips end up hurting if not supported well. A new mattress will help with your pressure points and provide your back and neck with the support.

Our suggestion is to hit a bedding store and try out the different kinds of mattresses available. There are innerspring or coil mattresses, latex, memory foam, and hybrids. Each has its good points and others have their not so savory characteristics.

There are firm mattresses, soft mattresses, and those that fall into the Goldilocks area of just right. Only you can tell what‘s right for you. Still, getting a new mattress means less pain on pressure point areas, less trips to the doctor, avoiding physical therapy, and less pain killers to pay for when the hip starts hurting.

With these ailments on the run you’ll find that you can save money which can be used to pay off any debt.

Up late?

Is your mattress keeping you up at night? If you are sneezing through the night or experiencing a great deal of pain in your hips, shoulders, neck, or back, then there is another way this mattress is costing you money other than medical bills. This would be in your lack of productivity.

Think about it for a moment. If you are not getting the sleep you need to be your best self the next day then you are most likely not performing at your peak when working. If your productivity lacks, over time, this can cost you money in sales, wages, or even a job if it got out of control. Of course, we a realize that few people out there would let their lack of sleep be the cause of their unemployment but we also know that things can get out of our hands easily.

Still sick?

An old mattress can wreak havoc on your immune system. This falls right back to the inability to get a good night’s sleep on an old mattress. A lack of sleep leads to a weakened immune system. This means you will get sick more often and we’ve already illustrated how health problems cost money and can be reduced with the purchase of a new mattress.

Gaining weight?

Have you noticed how your jeans or slacks are harder to button as of late? This could be the result of sleeping on an old mattress. Folks who sleep more, eat less. If you aren’t sleeping well and gaining weight this could lead to diet plans and the need to purchase new clothes. Losing weight can cost money, which might be a direct result of your bad mattress.

These are just a few problems with an old mattress and we hate to let this problem cost you more and more money. Mattresses are one of those areas where you need to invest money to save money, which is always a great idea especially where our health is concerned.

Why Crowdfunding is a Bad Idea for Restaurant Financing

Whoever came up with the phrase “labor of love” either owned a restaurant, or would certainly feel right at home in the restaurant sector. Indeed, whether the challenge is to keep inventory and supply costs low, maintain proper staffing levels, keep demanding customers happy, or fend off and endless stream of competition, life as a restaurant owner is more of a calling than a vocation. You’re either totally immersed in it, or it’s wiser to check out now and find another career path.

Of course, you’re made of strong stuff, and as such you have every intention of ensuring that your restaurant survives, succeeds and thrives. And that means sooner or later (or perhaps right now), you’re going to need restaurant financing to cover a temporary cash flow shortfall, or cover a long-term expense that boosts your profitability and competitive advantage. And while there are some good options available to you (and I’ll highlight those in a moment), right off the bad you should cross crowdfunding off your list. Here’s why:

  1. You probably won’t get the funding you need.

Forget about the inspiring success stories you read about on the web, or hear about on TV. The overwhelming number of businesses (restaurants and others) that try to generate financing through crowdfunding fail to come even remotely close to their target. There’s simply too much competition, and trying to piece together a major cash infusion through $50 and $100 pledges at a time is usually an exercise in frustration – and futility.

  1. It’s not funding — it’s a trade.

Although it’s called “crowdfunding”, as PC World points out, it’s not actually funding because you aren’t borrowing the money. You’re making a trade, which means in the long-run your total cost of borrowing might become excessive and unsustainable.

  1. You don’t know who might be lending you money.

Having a good relationship with your lender (or lenders) is important, since issues and opportunities will come up down the road. But with crowdfunding, you can’t pick up the phone or send an email and have a meaningful conversation. The most you can do is post mass updates on your campaign page, website or through social media, which is hardly strategic.

  1. Your reputation is on the line.

With apologies to Shakespeare: hell hath no fury like a crowdfunder who believes that they’ve been scored (whether they actually have or not is beside the point, it’s all about perception). As such, if you decide to change direction – not because you’re avoiding commitments, but because you need to steer your restaurant in the right direction – then expect anyone and everyone who has even pledged $1 to become hostile, and shred your reputation online and offline. Remember: the vast majority of people who pledge money through crowdfunding aren’t experienced lenders or disciplined investors. They’re just everyday, ordinary people who might not even know how to plan their own personal finances, let alone know how to run a complex restaurant operation.

Moving Forward

If crowdfunding clearly isn’t the answer for your restaurant financing needs, then what is? Well, unless you have flawless personal and business credit, have been in business for at least two years, have ample collateral, and can afford to wait several months to get the cash, then your best move is to enter the alternative lending marketplace and explore a working capital loan, merchant cash advance, or business line of credit.

Any of these options can give you the quick funding infusion you need at a reasonable cost, so that you can continue your “labor of love” – while you boost competitive advantage, sales and profits.