Credit cards should always be used wisely. You don’t ever want credit card debt because the more you have the harder it is to get out on top. However, it’s even harder to watch credit card spending during times of economic hardship like the current credit crunch we are facing. Here are a few tips on how to avoid increasing your credit card debt during a credit crunch:

1. If anything, you should be aggressively paying down your credit card debt. Things are getting worse and interest rates are going up so if you can, pay them off.

2. Be weary of using credit cards to pay for frivolous things. Ask yourself, do you really need the item? Is it a necessity? Forgo those purchases unless you know you can pay them off once the bill arrives. Not being able to pay off these items will cost you much more in the long run because you will be paying the high interest rates. 

3. If you have no choice but to put daily necessities on your credit card such as food and gas, pay off those items as soon as you can. Lenders these days are reducing credit limits while increasing interest rates so if you’re not paying off the bill then those items are costing you double or even triple the price if you were to pay in cash. 

The  main thing to keep in mind is that you should be spending wisely and saving aggressively so you can pay down any credit card debt you may have. It’s not worth ruining your credit over. 

Learn more about budgeting and how to use credit cards wisely.

Budgeting should be something that you do year round rather than just during a rough economic time. However, budgeting during economic downturns is much more difficult. Here are some tips on how to budget correctly:

1. Always plan for the worst case scenario such as someone losing their job. If possible, you should try to save at least 3 months worth of bills including rent or mortgage payments.

2. Cut frivolous spending like buying coffee from a cafe a few times a week or going out to eat. Instead, make your own coffee or get it from work. Simple as this may seem, these small cut backs add up in the long run. This can also encourage more bonding time between you and your family. Making dinner together can be a fun event.

3. Coupons, coupons, and more coupons! Clip coupons, pay attention to grocery store and department store advertisements, and stock up on items that are on sale that you use regularly. 

4. Contact your creditors if someone has lost their job and let them know about the situation you’re in. Sometimes they may be able to help by putting in place lower payment plans. The last thing you want to do now is to get into higher credit card debt. Always be aware of how your actions now affect your credit score. The last thing you want is to increase credit card debt or ruin your credit. Think long term.

5. Keep a journal or spreadsheet of what you are spending including food and all bills. Compare how you’re doing month over month. By doing this simple exercise, you’ll realize where all of your money goes and will make you more aware of your spending habits.

Click here to learn more about budgeting to save, and how to use credit cards wisely.