Watch out for these bad habits and be deft free.

1. Not making a budget

Budgeting is the most effective way to gain back control over your finances. Not only will it give you an idea about how much you spend and for what, it will also help you find out which expense you can trim to free some cash. It might as well slow down your compulsive spending habits and help reduce your debt. Check out our Budget Planner Debt Help Tool.

2. Paying bills with no particular order

By paying off the balances of your credit cards first, you could put yourself in deeper trouble. You should prioritise your expenses and debts and make a list of the amounts you owe by interest rate rather than by balance. After paying for your living expenses (house or rent payment), groceries and medical care should top the priority list. Next comes the car payment and secured loans. Working out a bill payment schedule and setting aside money for each pay cheque should help you manage your debt more smoothly.

3. Not checking your credit file

The information contained in a credit file can be used in determining a person’s credit-worthiness. Request a copy of your credit file today to ensure your credit history is accurate and up-to-date. There might be some errors. Just an example, payment marked late that came in on time could raise your interest rates, lower your credit score and affect your ability to obtain credit in the future.

4. Using multiple store credit cards

It might be tempting to get a store credit card in exchange for a 10% discount. But in the grand scheme of your credit history, these cards are not very beneficial. They might carry a highest interest rate you’ll be forced to deal with if you don’t pay off your balance each month. They can also negatively influence your credit score: just the act of applying for the credit card will put a small dent in your credit score. We recommend limiting the total number of credit cards you have to just two, if you can: one you can pay off each month and one with a low interest rate for those large purchases you’ll pay back over time.

5. Making credit payment late

Making a late credit card payment may not seem too big a deal. But it can end up being really costly and effect on your credit score, especially if you have a history of late payment. A payment that arrives at least one month due can throw your account into default and triple your interest rate. Your creditor will charge a late fee but might also notify the credit bureaus. In the end, late payment can have significant effect on your score, affecting your ability to get new credit in the future.