When it comes to needing help with debt, it’s natural to be concerned with our credit score. After all, if we have paid our bills on time and created a good payment history, chances are high that lenders will look on us favorably when we want to make a large purchase — or even if we’re renting an apartment.
It’s not so easy to stay debt-free in the long term, though. In fact, everyone knows that making minimum payments — or even worse, missing payments — can be damaging to your credit (and your self- esteem!) in the long run. The best solution? Save your credit for smaller, cautionary purchases — like a car or house.
But what if you’ve already Hurt your credit, but you still want to make a major purchase? It may seem impossible to actually get out of debt without damaging your credit, but it can be done, provided you exercise some discipline. Making a large purchase like a car or a house is a good example: if you save for it, you’ll be able to afford it.
The best way to stay out of debt is to pay off your credit card bills every month. Don’t put off that purchase until the day after your bill is due. If you don’t want to save the money to pay your bill, you can make a larger payment and pay only the interest, or you can pay as much as you can and then pay the principal in a couple of months.
When you pay with a credit card, you’re spending borrowed money. For this reason, paying with a credit card is like spending money you don’t have — you’re going into debt. Paying with cash is always safer, and if you can’t pay off your entire bill at the end of the month, you’ll be out of debt — and with a lower credit score.
It’s easy to fall into the habit of relying on your credit card. It’s easy to live from paycheck to paycheck with no cash for emergencies. Even for bigger, more important purchases — such as a car or house — you should be a lot of discipline in how you spend your money. You might choose to carry cash, or to simply not buy things until payday. But at the same time, if you don’t plan to pay with cash all the time, you have the freedom to leave your housewith cash left over and still have the things you want.
Unfortunately, whenever you hurt your credit, it can be hard to get yourself back up. That’s why if you’re in a position to get out of debt while still maintaining your good credit, it makes sense to take advantage of it (just like a weight loss plan would be better if you’re over sk skinny.)
One of the best solutions for staying out of debt is to be disciplined and diligent when it comes to paying your bills on time or early. If you can’t make it the first time, it pays to have a plan. And if you’re already in debt, it makes sense to pay off debt as quickly as possible.
But what about reducing your debt? It can be tricky, but it can be done. The best solution is to consolidate your debt.
If you have several credit cards, try to transfer any outstanding balance from the cards with the highest interest rates to cards with the lowest interest rates. If you’re in a position to consolidate your debt, do it. If you need a favor done, then do it — if you need more help, a credit counseling or debt consulting company can help you.
