smart spending

Ten Commandments of personal finance

IV. Thou shalt limit the amount of debt on credit cards

"When I got out of college, I had a contest with my roommate to see who could get the most credit cards," Sebold says. "The result of this race has resulted in my low credit report -- and that was a long time ago. Even though I've canceled or closed them down, it still can hurt."

Sebold recommends that you never use more than 50 percent of your available credit line on each credit card you have. For example, if you have a credit card with a $6,000 credit limit, don't use more than $3,000.

Sweeney recommends that people limit the number of credit cards they use, and in her opinion, no one should have more than two main credit cards. Department store credit cards are different because it's easier to keep a handle on those because you're most likely not going to shop there every day.

"However, if you use your credit card every time you make a purchase, you will have a hard time paying your regular monthly bills. And you don't want to be paying only the minimum on your credit cards -- you really need to be paying them off every month. Even people with good credit have discovered that the credit card companies have been raising their interest rates. Credit card companies are in business to make money, and they hope you charge a lot," she says.

V. Thou shalt pay monthly bills on time

By paying your bills every month, you will keep your good credit rating. In addition, you won't have to pay late fees. In today's world, with online banking available to most people, there is not much excuse for being late on your bills.

VI. Thou shalt avoid get-rich-quick schemes

There are many sad stories of people who have taken their retirement money and put it into oil, shady business ventures, pyramid schemes and other unsavory get-rich-quick plans.

Most of the wealthy people in the world didn't get that way with get-rich-quick schemes. If it's too good to be true, it usually is, says Sebold.

"There is never an opportunity that has to be taken in one to 10 days," he says. "Never. If there is pressure to do it immediately, it's a bad investment."

VII. Thou shalt protect thyself against risk

There are numerous risks in this world, many of them financial. Sweeney believes it's important for people to have the right insurance, such as health, life and disability, to protect themselves and their families. In addition, they need car, home and even renters insurance. A new survey by indicates that 58 percent of their respondents do not have renters insurance.

"When something happens to you that you don't have control over, insurance can be a blessing," she says.

Sebold says that identity theft protection is critical.

"We recommend that you lock your credit report," he says.


You may also want to get a photo ID on all your credit cards if your credit card companies offer the feature.

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