Debt Free Living in the 21st Century

Just say no

Credit card companies have gotten very smart in the way they solicit you with new credit card offers.  For one thing, they have wealth of data about your spending habits (e.g. where you shop, what you buy, where you go for vacation), so it’s very easy for them to target offers specifically to your interests.  It’s easy to think that you will sign up for a credit card offer just for the “free” gift or incentive and then cancel it.  However, most people never do and that’s why the average household has nine credit cards with an average available balance of $19,000.  Your best course of action is to not accept the solicitations in the first place.  Otherwise, your ability to get credit in the future for the things that you will really want, like a car loan or a home mortgage will be much more difficult due to your multiple credit card accounts and credit inquiries. Even if those accounts have a zero balance or even if you have never used the card, the credit issuer knows that they still represent the availability of credit, and that you could max them out the next day and suddenly be deeply in debt.

Create a budget….and follow it

Think about what you spend your money on and why.  Are you trying to maintain the lifestyle that you had at home, when your parents were paying for your needs and many of your "wants"?  Or are you trying to keep up with your “wealthy” friends or neighbors who are probably trying to live a lifestyle that they can't afford either?

Take the time to create a realistic budget that you can stick to. Many of your monthly expenses are regularly occurring fixed amounts (tithes, mortgage, car payment, etc.).  Make sure you have accounted for all your real "needs" before setting aside funds for your "wants".   

Remember that your budget should also include a savings component.  Too many people fall into the trap of just saving “whatever is left over”.  This often turns out to be zero or even a negative amount if your credit balances are increasing.  However, the prudent man forseeth the evil and prepares both for the future as well as for any unexpected expenses that might come up. 

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