1. Don’t use your credit cards unless you intend to pay off the balance at the end of the month.

The only way to effectively manage your money is to not spend more than you earn each month. That includes credit card use.

If you carry a balance on your credit cards from month to month you are spending your future income. This nearly always leads to problems and is the reason millions are experiencing major financial problems.

Purchasing items with a credit card with the intention of making monthly payments adds a lot of money to the cost of the item. To illustrate the cost of credit I have broken down the cost of a $500 TV using various methods of payment:

How Much Does A $500 TV Cost?

The answer is not as simple as you would think. You need to find out if you are paying cash or using a credit card. If you are using a credit card how will you pay the bill?

Let’s start with cash. You will pay $500 for that TV and in most states between 6% & 8% sales tax. The cost of the TV will be (using 7%) $535 total.

Now Kamagra Gold for the credit card. Simply using a credit card doesn’t increase the cost of that TV. It depends on how you pay the bill.

If you pay off the entire balance of the card each month you won’t pay a penny more than the $535 including tax.

If you pay $50 per month on that card you will pay $45.81 in interest (at 18%) for a total of $581 including tax. It will take you 11 months to pay it off.

If you pay the minimum payment on the card you will pay $198.34 in interest (at 18%) for a total of $733 including tax. It will take you 47 months to pay it off. You just added nearly 50% to the cost of that TV.

It doesn’t matter how many rewards you get for the card or whether you bought the TV on sale, if you don’t pay it off with either cash or pay the entire balance each month, that TV won’t be a bargain.

Of course if you already have credit card debt and can’t afford to pay them off you will need to set up a strategy to pay them off as quickly as possible and save as much interest as you can.

It is possible to pay off your credit cards in as little as two or three years and saving a bundle in interest. If you add a mortgage you can usually be debt free in 10 years. I recommend that you search the web using the term “snowballing debt payments”. This is a simple method of debt repayment that doesn’t require a lot of extra cash monthly to quickly reduce your debt. However, it does require dedication and discipline.

If you like the convenience of credit cards but want to avoid the interest you can either use a debit card with a Visa or Mastercard logo or simply pay off your balance each month. This will save you hundreds of dollars a year. Remember paying interest is simply giving money away and should only be use for necessary large purchases like a home or car.

Author Bio: Terry Rigg is the editor of the Budget Stretcher web site ( http://www.homemoneyhelp.com ) where you can get Free Budget Forms and Worksheets or Get A Free Budget and Bill Organizer when you subscribe to The Budget Stretcher Newsletter!

Category: Finances
Keywords: credit cards,money,management,budget,bills,