Work toward financial security - This should be obvious, but this thread is about repeating the obvious and making it clear for everyone to see. Consider what you will do if you are laid off or need to take a pay cut.
I have to second this - one reason I'm surviving my current trip through the Poverty Tunnel with as much comfort as I am is due to fiscal prudence.
Get yourself on a budget and stick to it.
Yes! It's a really basic concept but income should be equal to or greater than outgo. Budgets must be realistic, and part of that is including a small portion for entertainment/amusement. That may be as little seeing a movie once a month, or subscribing to an entertaining magazine.
Eliminate debt by spending less and paying more on the principle (the situation is presumably a little bit different for long-term debt like a mortgage or a student loan, but even then, the faster you eliminate your debt, the more quickly you free the money that was going to the payments and interest).
True. In fact, despite what some experts say, for many people debt should be avoided.
There are a some things it makes sense to go into debt to obtain, among them education, home, and a reliable vehicle. Note that all of these can retain value for many years past the point you pay them off. It is extremely important that when you acquire such a debt it is manageable
. You need to be able to make payments not only today but tomorrow - people who got into trouble with adjustable rate mortgages forgot that important point. You need to be paying off the principle - which is why people who bought into "interest-only" mortgages were, bluntly, fucking stupid.
Some things you should NOT buy on long-term credit include consumer electronics, appliances and food. Let me clarify that - if you buy a new clothes washer that will probably last you 10 years then taking a year to pay it off with manageable payments is OK (and might even help you either build or improve your credit rating) but you should not put that on a general credit card, try to arrange a discrete loan for that item alone and pay it off
on time. If you want a new computer you can pay for it in installments, but make sure the length of time you take to pay it off is shorter than the time you intended to keep/use it. The rule of thumb is that you keep it/use it considerably longer than it takes to pay off. Even so, for many household goods it is better
to save money for a few months then pay for it up front, all at once. This makes it cheaper because you aren't paying interest. Food, obviously, should not be paid for with credit cards because you eat it before it's paid off (exceptions noted below). If you are routinely using credit to pay for groceries You Have A Problem.
Credit cards are dangerous. Try not to carry a balance. It's OK to use them to purchase something, but ideally (for you) you pay it off by the end of the month. I try to take no longer than 2-3 months to pay off any credit card balance. The last time that was not possible for me to do I took out a loan from my credit union at half
the interest rate to pay off that card. One exception to the "don't use credit cards" would be making on-line purchases. However, if you do shop on line don't go crazy - keep the amount low enough that you can pay the balance off by the end of the month.
Credit cards do have some very good uses - usually for emergencies. I carry one when I travel in case, for example, I need a hotel room due to a delay, or an unanticipated car repair. However, when I do this I then pay the charge off as quickly as possible. If you own a small business, or travel on business, then charging business/travel expenses on a credit card can make sense and can have some utility in tracking and managing such costs but you have to keep the charges manageable
I strongly discourage purchasing perishables (such as food) on credit, but this can be pardonable for travel/business meals (but pay those off quickly!), some rare and major such as a graduation or wedding (but keep that debt manageable
- something you pay off in a month or two, not a decade or two), ordering on-line (but pay it off at the end of the month, or purchasing, say, emergency supplies (although most of us should be able to do that without resorting to credit, unless you're buying a portable generator or something, and again, strive for short-term use of the credit)
Bottom line on credit: If you can't make the payments on time you can't afford that loan