Avoiding Financial Trouble: Ten Tips

These simple suggestions will help you stay out of financial hot water.

1. Create a realistic budget and stick to it.
This means periodically checking it and readjusting your figures and spending habits.

2. Don't impulse buy.
When you see something you hadn't planned to buy, don't purchase it on the spot. Go home and think it over. It's less likely you'll return to the store and buy it.

3. Avoid sales.
Buying a $500 item on sale for $400 isn't a $100 savings if you didn't need the item to begin with. It's spending $400 unnecessarily.

4. Get medical insurance if at all possible.
Even a stopgap policy with a large deductible can help if a medical crisis comes up. You can't avoid medical emergencies, but living without medical insurance is an invitation to financial ruin.

5. Charge items only if you can afford to pay for them now.
If you don't currently have the cash, don't charge based on future income -- sometimes future income doesn't materialize. An alternative is to toss all of your credit cards in a drawer (or in the garbage) and to commit to living without credit for a while.