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Mistake #4: Buying things on credit. According to a recent post on bankrate.com, the average interest rate for a standard fixed rate credit card is 13.44 percent, and it’s 14.56 percent for a standard variable rate card. But there are cards out there with a rate of up to 35%. If you went into a store to buy something that was $100, would you be upset if it rang up for $113.44, $114.56, or $135? Of course you would, but people pay those extra charges (and more) all the time by putting them on credit cards. Buying things on credit costs you in more ways than one.

Solution: Many of the things we buy on credit aren’t things that we actually need at all (or at least that was the case for me), so the first step is to really think about the difference between a need and a want, and to realize that there are very few needs. Draw a hard line, and commit to not using credit cards. Cultivate patience, and save up for the things you want instead. If you’ve already gotten into debt, commit to a repayment plan that’s as aggressive as you feel comfortable with. Remember that your money goes farther when you don’t use credit, and in the long run you’ll be able to buy a lot MORE of the things you want by avoiding credit cards. The second step is to build an emergency fund, which is covered in next week’s installment of the series.

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