When should you start taking action about your debt?
The best time to do it is BEFORE you even get in debt, of course. How do you do this?
Several ways:
By setting aside a percentage of your paycheck in an interest earning “rainy day” account EVERY single month, so that when the inevitable emergency strikes – medical issues, layoffs, business folds, etc. – you are prepared.
By only buying what you can afford – and by refusing to run up credit card debt to buy things that you can’t afford. If you can’t afford something right away – save up and pay for it all at once.
By only taking out loans for things that you truly need, like a house (that is affordable for you!) or a car or a student loan. And by shopping around for the best deal, and never taking out an adjustable rate mortgage loan.
By keeping a good credit rating so that if you DO have an unavoidable financial crisis, you can pay for it if necessary. Do this by having at least one credit card, and paying it off on time every single month, with perhaps a VERY small balance carried over every month. Also, make sure that you only charge about 20 or 30 percent of your available credit, monitor your credit report constantly for identity theft, and don’t apply for credit at a whole lot of places at once.
If you do all of these things, you will be prepared when a financial crisis hits. Everyone has one at some point or another – the roof leaks or a tree falls on your roof, or a hurricane sweeps through town and your insurance company doesn’t cover what they should, or you or a loved one become ill and run up huge medical bills…
But the people who come through their crisis relatively unscathed are those who have been preparing for it all along.