Debt (Debt prevention)

The best way to prevent getting into debt is to always have some money saved for emergencies. You never know when you'll end up in a situation that will require hundreds or thousands of dollars to be paid instantly. If you don't have anything save, you will have to take a loan, or go into overdraft, which will cause your further expenses you could have avoided.

Having a credit card can save you when you are out of cash and ATM is nowhere to be seen. But they can also ruin you financially if you are not careful. The golden rule when using credit cards: Never charge products or services you can't afford to pay the following month.

No matter how tempting it is, resist it if you don't want to get into debt. Once you get into that hole, it's very hard to come out of it.

No matter how much stuff you buy, it will never be enough for you to be happy. There is always something new you could buy. And if you can't afford it, you'll get into debt. So what you need to realize, is that you can't buy happiness. No one managed that. Stop envying other people on their possessions and competing with them and try to achieve happiness without being dependant on stuff you can't afford.

If you miss your credit card payment, even once, you will most likely have to pay late fee charges. If you do it multiple times, your interest might go up and your credit score will suffer. In other words, you'll get into fi slight financial troubles that could easily snowball to major financial troubles. So try to avoid bein late with your payments.

Whenever you get a bill for your credit card, try to pay all of it. If you make only a minimum or partial payment, the rest will transfer to the following billing period and you will, in fact, be in debt and will have to pay interest. And to stay out of debt, you should avoid any situation that will cause you to pay interest.

When you consider interest and fees connected to cash advance, you'll realize it's one of the most expensive ways to get some money. So, naturally, you should refrain from using it unless you really have no other choice. If you use a cash advance from one credit card to be able to pay another credit card, you are already in trouble and should immediately start changing your spending habits and looking for ways to get out of debt.

Transferring your balance from one credit card to another can be a good thing if that other credit card offers lower interest rate. It can help you pay off your debt faster. But only if you are aggressive about it.

Remember there are fees involved for every balance transfer. And after a certain period of time, your new credit card will most likely have higher interest than your old credit card, making your debt harder to pay off. And then you will most likely be forced to make another balance transfer and so on, and so on. Only do a balance transfer if you plan to pay off your debt during your new credit card's "tease period" with lower interest.

If you can't find your credit card, or you suspect it might be stolen, immediately report it to your bank or credit card company so you don't end up paying for products and services you didn't buy. If you don't report it on time, it will be almost impossible for you to dispute charges made on your credit card.

Carefully examine every document before you sign it. Take all the time you need. Ask a friend or a relative to explain it to you if needed. Check if there are hidden fees, what are the penalties for missed payments, what are your options if you can no longer repay your debt, etc. Don't just rush through it. Read it thoroughly.

If at all possible, always have your medical insurance. It's one of those things you cannot afford to skip on. You never know when will something happen to you. Without medical insurance, you could easily end up with a bill of several thousand dollars, depending on what medical services you used.

Payday loan lenders are, basically, legalised loan sharks. They will give you a short term loan in a matter of minutes, but in return charge you an astronomical interest rate, far higher than anything you have ever encountered. We are talking about 200-300% interest. Sometimes even more.

Needless to say, due to high interest, once you get caught in this vicious circle of payday loans, it becomes almost impossible to get out of it.

Understanding basic financial concepts will allow you to make wiser financial choices and prevent you from getting into debt. Learn about following topics:

• APR
• Interest and how to calculate it
• Difference between fixed and variable interest rate
• Credit score
• Balance transfer
• Taxes
• Bankruptcy