smart spending

6 ways to avoid financial Groundhog Day

Repeated mistake: Carrying card balances
Repeated mistake: Carrying card balances © photastic/Shutterstock.com

It seems easy at the time. You have unexpected bills, extra expenses or a drop in income. So you reach for the plastic.

Then, for months, you drag that balance with you.

"Credit cards are one of the most difficult things" for consumers to manage effectively, says James E. Burroughs, a University of Virginia commerce professor who specializes in consumer behavior.

While we may see them as a license to spend or as money in waiting, credit cards are a payment method -- just like cash, a debit card or a paper check. The difference is that credit cards come with an interest rate.

To avoid the repeat rut, understand how much you can spend and comfortably pay off every month. (Already have a balance you can't cover? Sorry, buddy, you're cut off.)

Track your spending as you go. Card issuers make it easy with text and email alerts, says Sprauve.

Track the true cost of making only the minimum payment every month.

And give yourself the gift of an emergency fund. Whether you call it "a savings account" or the "rainy-day fund," this is where you can go when you have unexpected expenses that arrive without unexpected windfalls.

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