Keep Track of Your Credit Score
Many people seem to share the misconception that having no debt or late payments means they have a great credit score. In fact, your credit score is based on how you use your credit; so never using your credit card may actually be hurting your score. Instead, put a monthly bill on an automatic payment plan on a credit card, then pay the bill in full each month. This will keep your credit score active and building, with zero cost to you.
Recognize Good vs. Bad Debt
There are debts that are perfectly acceptable to have. An education, for example, is a strong investment that by some measures pays out a 15% dividend over time; getting yourself into a reasonable amount of student loan debt may actually be a wise money management strategy, if you look around for low-cost educational options that provide earning opportunities. Similarly, a mortgage can be a good investment in your stability and long-term equity, so don’t be shy about signing a mortgage that is within your budget. Just because some people are over their heads in student loan debt or stuck paying mortgages on homes when they bought above their means, that shouldn’t deter someone from exercising prudence in these investments.
Your Debts are Liabilities
Too many people begin to see their debts as just a fact of life, something they carry with them forever. Whether this is because they are overwhelmed by the size of the debt – it has become so large as to have lost all real meaning – or whether there are other factors at play, it is wise to open your eyes to your debts, to understand them and what it takes to make them disappear. Probably you will have to adjust your spending habits, buying less clothing, eating out less, getting rid of unnecessary expenses, even cutting down on the driving to save on gas. But the first priority ought to be pulling yourself out of your debt situation and into financial independence. There are many websites out there devoted to helping you educate yourself about money management; take advantage of the wealth of information and take your first steps toward financial freedom.