How to Avoid Credit Card Debt

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Living within your means can be done. You don't want to be a slave to the credit card company, do you? Learn what to do to stay out of credit card debt.

Step 1: Calculate monthly expenses
Calculate your monthly expenses--right down to how much gum you buy--and compare that with the money you have coming in.

Step 2: Scale back
If your expenses exceed your income, see what you can live without. Keep slashing away until you have enough to live on, plus at least $50 a month you can put aside for unforeseen emergencies.

Tip
Don't forget to factor in periodic expenses like birthday gifts, haircuts, and school supplies.

Step 3: Cancel your cards
Cancel all your credit cards except one. Tuck that away for emergencies.

Step 4: Set low limit
Ask the credit card company to set a low limit on your card.

Tip
Throw your change into a jar every night; when the jar is filled, put the money into a savings account.

Step 5: Use debit card or cash
Use a debit card or cash to pay for all purchases.

Step 6: Find extra work
If a large unexpected expense throws off your budget, consider taking on part-time work or odd jobs like babysitting until you're caught up.

Step 7: Celebrate
Now celebrate your freedom from debt--but not so much that you end up back where you started!

Did You Know?
The average American household has $9,000 in credit card debt.