How to Avoid Credit Card Debt

When I came into the U.S. I was first introduced to credit cards and it felt like easy money. It was as if I had won the lottery. I kept using them back until they were maxed out. It took me a while to come up with some rules and tricks to avoid credit card debt after several trials and failures.

Rule #1: Have a strict monthly budget

If you don't have a budget and you have credit cards lying around, you will feel tempted to use them. You need to be aware of how much you need every months and do your best to not spend a dime more. Ideally, try to have spend less than you earn and put at least 20 percent of your money away. I know it's easier said than done. But no matter how much you make, if you don't have a strict monthly budget, you will overspend and will always feel broke.


#Rule #2: Don't just make the minimum payment. Pay the credit cards in full.

It's easier to assume that because credit cards only require a small minimum payment that they are doing you a favor. However, once you read the fine prints, you will quickly realize that you are helping them make a fortune and you are getting poorer as a result as time goes on. It's the opposite of a good investment. The rates are usually around 20 percent or higher since the credit card loan is unsecured (without collaterals). Don't make the mistake of only making the minimum payment. If you can't afford pay off the entire card at the end of the month, please don't use the card even if you'll earn some points. Let credit card companies make money from merchants who accept their cards for a fee. Only use credit cards to build a credit, not to make other people rich.


# Rule 3: Cut your credit card in half and don't use it online

Sites like Amazon make it easier for you to spend without thinking too much. Billions of dollars have been spent deeply understand your taste and buying habits. Be smart. Be wise. All it takes is one stressful day and you'll end up swiping your card to throw a big party. Just cut your card in half and have a rule of never using it online. Use a debit card because you'll feel the pain a little more since credit cards feel like somebody else's money. They are designed to feel that way to give you an incentive to spend. I've heard many times that debt is good. My opinion is that debt is not good. Debt can be useful, but it's definitely not good unless somebody owes you and not the other way around.


For the 2 remaining rules, feel free to watch this Youtube video. Leave a comment and I'll make sure to reply. Happy debt freedom!