Most of the time, you have a choice when it comes to getting into debt. Some things are worth going into debt for:

Buying a house if you plan to stay there for at least a few years, and if you can get a good interest rate on your mortgage loan, and if it’s not stretching your finances; buying a vehicle so you can get to work or school; student loans so that you can go to school.

Most other types of debt, however, involve luxury rather than necessity.

It’s not a bad idea to have a credit card that you can use in case of emergency, but you need to understand what the meaning of “emergency” is. The need to get a new designer outfit for that upcoming high school reunion is not an “emergency”.

And, for that matter, an upcoming holiday or birthday is not an emergency either. Ask yourself – if you can’t afford to buy a pricey present, or presents, is going into debt to buy them the wisest decision?

Because odds are you will NOT have paid this present off by the time the holiday or birthday rolls around next year…and what is going to be different next year at the next holiday? Will you be forced to go into even more debt if you want to buy more pricey presents?

Before you apply for credit or run up your credit card, you ALWAYS need to stop and question yourself as to the necessity of this purchase. Is this purchase contributing to your future and your family’s future wellbeing, the way a house or a college education will?

Is it a practical necessity, the way a vehicle is?

If the answer is no…it is very rarely a wise decision to take on that debt. Discover how to get out of debt fast

If you are in debt, odds are that on your own you are not great at managing money.

So to get out of debt, you’re going to have to get a little sneaky. Here are some ways to “trick” yourself into saving more, paying bills on time, and managing your finances better:

Put your savings on autopilot. Set up a savings account and have your bank automatically withdraw money from your checking account and deposit it in savings. Do this even if you literally can afford $10 or $20. If you can set up the kind of account, like certificate of deposit accounts, where there are substantial penalties for early withdrawal, that is even better, because you are less likely to raid the account.

Put your bill paying on auto pilot. Most banks these days will mail checks for you on whatever day you tell them to. Or you can pay bills online.

Do the old “freeze your credit cards in a block of ice” trick to make it harder for you to grab your credit card and use it for an impulse buy. Or stash the credit cards in a safe deposit box.

When you go shopping, decide in advance how much you will spend, and bring cash. Leave your checks at home, leave your credit cards at home. You’ll be far less likely to splurge. debt-be-gone" target="_blank">Discover how to get out of debt fast

Do you know when is the optimum time to contact creditors?

Right away.

Let me explain.

Ideally, you want to contact them right away – BEFORE you have to make a late payment.

If you have been laid off, or your house is about to be foreclosed on, or your adjustable rate mortgage just reset and you can’t get a better loan deal and you may have to give up your house, or you suffered an illness and have huge medical bills and missed weeks of work…

Call the creditors and explain.

Obviously it is important that you are telling the truth and that you intend to pay them back.

But if you call them BEFORE trouble starts, you may be able to save your credit rating, or at least lessen the damage. You may be able to avoid late fees and collection agencies.

So what if you waited too long, collection agencies are calling?

Call them right away. Explain your situation.

Because the longer that you wait, the worse your credit rating becomes, and the more likely it is that your creditors will take drastic action such as going to court or filing against you.

See what you can work out as far as a payment plan; most likely they will accept lower payments rather than no payments.

Hiding from creditors will not make them go away.debt-be-gone" target="_blank">Discover how to get out of debt fast

If you want to stay out of debt, or get out of debt, there are some numbers you should be keeping a close eye on.

Your credit score – at the very least, check your credit report once a year to make sure there is no inaccurate information on there, but if you can afford it, it’s worth paying for monthly credit checks. That way if there is ever an inaccurate ding to your report you can check it quickly.

Your credit card bills – Read them from beginning to end carefully because credit card companies are dong all kinds of sneaky things these days. They may lower your credit limit, which makes it look as if you’ve charged to the max even though it’s not your fault; they may raise your interest rates drastically if you pay late on ANY bill, not just theres.

Your cell phone bill – there are an astounding amount of errors on them. You also may be paying for things that you don’t need, like a texting package or internet service that you never use.

Medical bills are also frequently riddled with errors, and guess what, amazingly, they are almost always in the doctor’s or hospital’s favor. Look up Medical Billing Advocates on Google if you think that your medical bill is signficantly off; they often will work on a contingency basis.
debt-be-gone" target="_blank">Discover how to get out of debt fast

When you look at tempting credit card offers, keep in mind that credit card companies create all of their programs to benefit THEM, not you.

Here are some ways that they lure you in and then end up socking you with big fees:

1.) The “$35 a month” computer, TV set, jet ski…You see the bright shiny new toy. You want it. You see that you only have to pay $35 a month. Your eyes light up. You can afford that! What you don’t realize is that if you are even a day late with payments you will be hit with huge fees and your credit rating will plummet. Also, you’ll end up paying far more than the purchase price of that item if you only pay the minimum.

2.) No payments or interest for six months! And then at the end of that six months you have a used item which has probably half of it’s original value, and you will be paying it off at a high interest rate for years.

3.) Low interest for six months on all balance transfers! So you transfer thousands of dollars worth of credit card balance to this new credit card. What is going to happen in six months? The interest rate on this new credit card will shoot up. Worse, you will probably have run up the old credit cards that you had, again, and now will have a balance on the old cards and new cards.

4.) Open this new department store credit card today and save 10 percent! Opening any new credit line will ding your credit rating and could potentially cause the interest rates on ALL of your credit cards to rise.
debt-be-gone" target="_blank">Discover how to get out of debt fast

Up until very recently it seemed like everyone was playing the game of “keeping up with the Joneses.”

People bought far bigger houses than they needed to. People bought houses when they had no money for down payments. People who wanted to live a more affluent lifestyle than they could afford just borrowed against their home equity. What the heck, home values only go up, right?

Then the housing market crashed and took the rest of the economy down with it.

The good news? There is no longer the same intense pressure to keep up with the Joneses. In fact, being frugal is now in. Coupon clipping websites are seeing record traffic. High end stores are suffering.

Of course, it shouldn’t matter what other people think and it shouldn’t affect your lifestyle and spending – but it almost always does. A couple of years ago people who didn’t have a McMansion and a new gas guzzling SUV were looked on with pity.

Now they’re looked on with envy.
debt-be-gone" target="_blank">Discover how to get out of debt fast

When dealing with debt, the worst thing that you can do is try to hide from your problems.

If you do not have enough money to pay all of your bills in full, it’s tempting to just hide your head in the sand and hope that things get better.

Here is what will happen if you do that: as soon as you miss a payment, your credit score will drop. Other credit agencies will be notified, and this gives all of your debtors the legal right to raise your interest rates. Even if you are paying them on time and it was someone else that you paid late.

Within a month or two your debt will be reported to collection agencies which will make your credit rating drop even lower. It will be hard for you to get approved to rent a house, to buy a car, to rent a car, to get a cell phone contract, to get approved for refinancing a mortgage, to get a credit card.

At some point your debtors can take you to court and get a judgement against you. This makes your credit rating even worse.

So as you can see, the longer you hide from your money problems, the worse things get.

The best thing to do is call creditors immediately, explain the situation, and try to work out a lower payment plan. Would they rather get half of the payment, or no payment at all? These days, with so many people defaulting on loans, they would rather get some payment than nothing.

It still may hurt your credit rating to have to negotiate reduced payments, or to skip a payment, but if you can at least stop debts from going to collection agencies, to court judgements, even to foreclosure and reposession, you will be better off than if you tried to hide from the problem.

Is it ever helpful to your finances to use a credit card? Some financial experts are against any use of credit cards ever. However, there can be positive benefits to using a credit card if it’s used wisely.

First of all don’t get a LOT of credit cards – get one, and get the best interest rate that you possibly can.

Don’t transfer balances from one credit card to another, because it can hurt your credit rating and it will just tempt you to use the credit card that you have just transferred the balance from. That nice new low balance can tempt you into evil – in this case buying things that you don’t need.

Don’t ever pay your bill late. This wreaks havoc with your credit rating.

Don’t pay just the minimum. Pay all of your bill off every month if you can; if not, pay as much as you can until you have paid off your balance.

Don’t close down old lines of credit; close down newer onces.

Don’t apply for department store credit cards.

Do take advantage of frequent flyer miles.

Don’t lock the credit card away and never use it. What, you say? Shouldn’t I be trying to save money?

Yes, but if you never use your credit card then credit scoring companies can not build up a credit history on you. Much better – charge something like groceries that you would have purchased with credit anyway…then pay it off completely every month.

Maintaining a good credit rating is more important than ever in this economy, because loan standards have tightened up considerably. A credit rating that would have been considered good even a few years ago is now likely not enough to get you approved for a home loan or student loan or car loan.

And if your credit rating is below the mid-700s, you are likely to pay higher interest rates on all of your loans.

Here are some things that will seriously harm your credit:

Making a late payment. It is a good idea to send your bills off at least a week before they are due; ten days if possible. One single late payment can drop your credit score by 100 points.

Charging all of your credit cards to the max. Or even just carrying too much debt on them. Do not charge to the limit; try to keep the amount that you have charged to no more than 30 or 40 percent of your credit card balance.

Applying for new lines of credit: This will lower your credit score.

Declaring bankruptcy. This will play havoc with your credit scores for up to 10 years. It is an absolute last resort.

Applying for high interest, unsecured loans.

Closing down old lines of credit. If you must shut down a line of credit do it on your newer credit cards.

Applying for department store credit cards.

If you are at a point where you have turned over your debt to debt collection agencies, here are some things that you should know.

debt Collection agencies are not allowed to threaten you. They are not allowed to publicly humiliate you by sending letters which state on the outside of the envelope that you owe them a debt, or calling your place of employment and identifying themselves as debt collectiors.

They are allowed to go to court to attempt to collect the debt against you.

If you have missed payments, you may be able to negotiate with the debt collection agency. They may agree to lower interest payments, or drop fees against you.

They also may agree to take a payoff for a reduced amount of money – allowing you to discharge your debt for less than what you owe.

However this is not necessarily an ideal solution. There are a couple of reasons for this. One, it is very likely to show up on your credit report, further hurting your credit. And two, the IRS may look on the amount of debt that was forgiven as income, and tax it.

A better solution is to negotiate low enough payments that you can afford to make payments every month. Even if it means that you have to make payments for a longer period of time, you are better off paying off your entire debt then you are asking for a reduced lump sum.