Taking care of credit & debt basics

Did you have enough money last month to pay all your basic bills - in full? If you are not sure, look at your paychecks and bank statements for a typical month and compare them to your bills, payments, and withdrawals. It's hard to use money to make money if you are already sinking into debt.

Even families with good salaries can allow expenses or debt levels to get too high. Examples include not paying off your full credit card balance every month, or spending more than you take in. Habits like these can cost you a lot of money in the end.

Get yourself into a position to cover all your main living expenses. Ideas can range from finding a cheaper place to live to brown bagging lunch more often. Debt is very expensive, especially if you are paying high interest rates, which could be the case with some credit cards, payday loans, and tax refund anticipation loans. It can take just a few months to run up enough debt that could take years to pay off, especially if you only pay the minimum balance on your credit cards each month. Who wants to cope with debts for years and years?

True marks of success: debt free, with money set aside

It's fun to wear designer clothes and to drive a fancy car. However, the real signs of success are tougher to spot. The success habits of the rich have been studied - and they are all things you can do yourself: Pay all bills on time. Keep track of expenses. Pay credit card balances in full every month. Put aside enough for emergencies - at least 3 to 6 months of pay. Put money into money-earning investments out of every paycheck.

Bankruptcy laws changed in 2005, making it harder for debtors to avoid paying off at least some of the money they owe. Don't count on bankruptcy laws to shield you from creditors.

Major financial problems can happen. Have an emergency fund set aside to protect against job loss or an expensive medical problem.

If you are counting on your family to rescue you, maybe you should think again. Can you be sure that relatives will be able to pay off your debts? Would you feel good about having to ask for support?

Protect yourself and your family. Keep spending modest, lower your debt, and pay yourself something each month. Investments can help your money grow.