5 ways to protect yourself from debt problems

If you're trying to clean up your finances this year, make sure you're protecting yourself from some unnecessary debt problems. Credit card debt and loan payments can eat away at your budget and make it impossible to save a decent amount of money to live a debt-free lifestyle. Preventing debt problems before they spiral out of control is one of the best money moves you can make this year. And, you can start right now.

Here are five things you can do to protect yourself from serious credit and debt problems:

1. Pay off all credit card charges before the end of the month. Sounds like common sense but few people actually do it. If you decide you have to make that next purchase on a credit card - which probably means you can't actually afford it right now - make sure you have a plan to pay it off before the billing cycle is over. Carrying that balance forward means you'll be paying interest on the entire balance.

2. Stop transferring balances. Transferring balances from one credit card to another a single time is usually OK - as long as you know you're going to pay off the new balance at a lower interest rate. However, transferring balances multiple times just to cash in on the next deal can wreak havoc on your credit score and make it impossible to finally just pay that debt off for good.

3. Get yourself on a bill payment schedule. Missing a single credit card or loan payment could lead to late payment fees which are conveniently added to your current balance. Missing a few payments will put a dent in your credit score. Make sure you pay at least the minimum payment to all of your creditors on time every single month.

4. Be mindful about what you're charging. Don't charge purchases just out of convenience or to earn rewards points. Make conscious decisions about how you're going to pay for larger purchases and even last-minute purchases. Unless you're dealing with a serious emergency, you probably don't need to charge the purchase on a credit card - you probably do it out of convenience or just to postpone the responsibility of having to fork over the cash for it.

5. Limit the number of cards you have. Stop applying for new credit cards. Even when your favorite store is offering a discount on your purchase for opening a new account, remember you have to charge that balance to get the discount and will probably put off paying the balance until the statement arrives. Remember that you came into the store and chose those items based on what you could afford. Go ahead and pay for those items with cash and you'll have one less credit card to worry about.

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