You never knew you
could make it to the finishing line. But you did! After all these years of
doing the right things – paying your bills on time, staying way below your
credit limit, keeping tabs on your credit score, and so on – it is such a
relief that you’ve finally dug yourself out of your financial hole. If you are
thinking like most people who achieved a similar feat, you want to avoid
falling back in. Here’s how.
Resist
Tantalizing Offers for Credit
As you might expect,
once your credit ratings proves to lenders and banks that you are an acceptable
lending risk, they will start offering you the best credit card reward programs
as well as lowest interest credit cards. I call these tantalizing offers
because, apart from the aforesaid offers, you will also qualify for lower rates
and higher limits on practically everything, which means that you might be
tempted to commit a financial blunder, such as running out to buy a new car or
a sexy expensive smart TV that you absolutely don’t need. Now, don’t get me
wrong: it may actually be a great time to go shopping for a new car if the
finance rate is good and if you really
need it. In each case, look carefully before you leap!
I don’t know about you but I am always touchy about debt for one simple reason: Debt is a
four-letter word that can wreak such havoc in your life that you won’t be able
to have a nice family dinner, live in the place you want, drive the car you prefer,
get your dream job or even have a good relationship with your wife, for that
matter. Unfortunately, debt is the quintessential American experience these
days, with the average American family owing as much as $79000 in 2004 – a figure
that have definitely increased significantly by 2013(Associated Press, 2004). Today,
most Americans sign up for debt at an early age, sometimes before the age of
18: Either in the form of credit cards for filling the gaps their budgets and
for completing a purchase; in the form of student loans, or to buy cars and
houses. The bottom line is that it is best to avoid too much debt because it
will have lasting consequences on your life.
Use
the Best Deals When You Refinance Your House
The maxim here is simple: Refinance with caution. Of
course refinancing your mortgage can be one way of making your newly improved
credit work for you. Even though today’s mortgage rates may allow you to reduce your rate
substantially, plunging headlong into the wilds of big-ticket loan refinancing
without a little help from an expert, especially when you feel uncertain about
the way the process works, can be like taking a leap in the dark. This means
that it is always the best to invest a little cash in consultation with a
financial adviser you can trust so that you will get the best deal available(Boyle,
2014).
Maintain Your Tried-and-True Personal Finance
Habit
Sure enough, life with an excellent credit can feel
pretty different, which can easily make you to start thinking that you can
safely carry more debt, now that you are suddenly getting offers for all those
low-interest credit cards – a mindset that intensifies the temptation to
abandon the habits that made your credit score to climb to tip-top levels.
Watch out for this and be very careful: You must retain the habits that got you
there, no matter how many sexy offers you receive from lenders. To avoid
turning to credit in your next moment of financial crisis, this is the right time to start building an
emergency fund in a high-yield savings account.
Have fun!
References
Associated Press(2004): On Borrowed Time – Living Beyond
Our Means. Retrieved March 31, 2014 from http://hosted.ap.org/specials/interactives/_business/debt_addiction/index.html?SITE=AP
Boyle J.(2014): 3 Things to Remember When Your
Credit Improves. MSN Money. Retrieved March
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