Even though everyone tries to make good financial decisions, sometimes a little debt can spiral out of control. Suddenly, you find yourself with a pile of bills and a whole lot of stress. So what do you do? Create a plan! The debt snowball method is a way of tackling your debt in small and manageable steps, so you can easily make progress without feeling overwhelmed. Let's go into the basics of the debt snowball method, and learn how to get out of debt!

Step 1: Make a List

Before you can pay off all your debts, you need to know exactly who and what you need to pay. Make a list of all your debts in order of smallest to largest. For now, ignore the interest rate and just pay attention to the total amount owed. Here is an example:

• Credit Card: $1,000
• Auto Payment: $3,000
• Student Loans: $10,000
• Mortgage: $50,000

This list will become your blueprint for debt reduction. From now on, you will pay the minimum payment on every bill on your list - except for the smallest. The smallest bill is your first priority for elimination. That means any spare cash that you encounter will go into paying that bill until it is fully paid off. In this example, you would pay the minimum amounts on your auto payments and student loans. But any money you obtain through a second job, gifts, or budgeting will go toward your $1,000 credit card bill. Once the credit card bill is paid, repeat the process for your auto payment and so forth.

If you’re up to your eyeballs in credit card debt and drowning in the chaos of juggling multiple payments and due dates, credit card consolidation might be a good solution for getting you back on track.

How Credit Card Consolidation Works

Just like it sounds, credit card consolidation takes all of your credit card debt and combines it into one lower-interest loan. That means you only have one bill, one monthly payment, and the security of knowing exactly what you owe and what kind of progress you’re making.

Your Options

Balance Transfers

Having a lot of available credit sounds good, right? Well, let’s think about this for a second. Lenders are in the business of making money off the interest you pay, so increasing your amount of available credit is a technique for adding to their profitability. But what’s best for your situation?

What is Available Credit?

Simply put, your available credit is the amount that the bank or lender has agreed to loan you. It’s based on your credit limit minus the balance you owe. Lenders decide how much credit to make available based on your income and credit score, which basically tells them how big of a risk it is to lend to you. They look at several factors, including whether you pay your bills on time and if you’ve ever defaulted on a credit obligation in the past.

Should I Increase My Credit Limit?

Sometimes people try to raise their credit scores by increasing the limits on their credit cards or applying for new ones. That’s fine, but it’s important that you understand your credit utilization ratio and how it affects your credit score. That’s the ratio of how much of your available credit is being used. Yes, increasing your credit limits may help boost your credit rating, but if you max out your available credit, you could actually hurt your score. Remember, more available credit comes with more danger of getting into debt you can’t manage.

If you’re concerned about ​how to build credit, don’t fall for these myths for improving your credit score. It’s possible to achieve a good credit score, but don’t waste your time focusing on the wrong things. If you can establish a good track record of consistent payments, along with a diverse mix of the types of credit you have, you can ​build up a good credit score​.

Myth #1: Removing Old Inquiries

Every time you apply for a loan, creditors pull your credit report with a “hard” inquiry. This causes your score to go down because it shows you want more credit and more risk. Other inquiries, like offers you receive in the mail or from potential employers, are considered “soft.” You may have heard that if you have more soft inquiries, it can bump the hard inquiries off, but don’t spend time trying to generate more soft inquiries because this is not a major factor in your credit score.

Myth #2: Closing Old Accounts

Although it seems like closing accounts will help improve your score, it won’t, and it could actually hurt it. Why? Because it could shorten your credit history and reflect a smaller amount of available credit, neither of which helps your cause. You want your credit history to be long, and your utilization rate, or how much available credit you’re using, low.

Who really wants to be ​bad with money? Sometimes it just sort of happens, and you wake up one day in a difficult situation. If you can swap the bad money habits that creep into our lives for positive habits​, and start making ​good financial decisions​, you’ll be happier and less stressed out.

Living Without a Budget

The idea of a budget hurts, but it’s key for understanding how much money is coming in, what you can spend, and more importantly, what’s left over for saving and investing. Between all the apps and spreadsheets out there, it’s easy to plug in some basic information and start tracking. Weekly and daily updates will help keep you from spending out of control, which will help you avoid the next bad money habit.

Living Beyond Your Means

Overspending is one of the biggest challenges facing people today, with our consumption-driven economy and the fact that we hardly ever pay with cash. If you’re charging basic necessities, running up credit card balances, and borrowing money, you’re clearly spending more than you have. Allocating dollar amounts and holding yourself accountable is the way to do it. And, if you prefer to pay with plastic, use a debit card or pay your credit card off in full each month.

Short-term investments offer you the opportunity to grow your money, while protecting it, too, since you’ll probably want to access it within the next five years. This means contemplating very different vehicles than when you’re investing for retirement and other long-range goals because you don’t have as much time to ride out any market lows. It’s normal to feel intimidated by all the choices out there, and maybe you don’t feel like you have the ​financial skills​ you need for making ​decisions​. Consider these ideas for smart short-term investments that have growth potential, combined with safety and stability. They’ll help you avoid ​investing mistakes​.

Money Market Accounts

Money market accounts are similar to regular savings accounts, and they’re FDIC-insured. When you open this kind of account, you’re investing in the market for short-term debt, so you earn higher interest than a standard savings account. Money market accounts give you easy access to your funds, often via debit cards and checks. Minimum required investments can be in the thousands of dollars, but shop around because there are accounts available with much lower minimum deposits.

High-Yield Savings Accounts

High-yield savings accounts may be available at your local bank or credit union. With rates of one percent or higher, high-yield savings accounts blow away the interest rates on traditional savings accounts, especially the ones offered by online banking institutions. Like money market accounts, they also offer easy access to your funds and are FDIC-insured. The good news is the minimum deposit requirements are not high. The bad news is that the interest rates are still quite low.

Life is just expensive, and auto payments and insurance are one of the biggest monthly costs people have outside of housing. Wondering ​how to save money on car insurance? Here are some tips that can help cut your bill:

Go Shopping

Prices can vary dramatically from company to company, so get several quotes. It’s easy to do online and with a few phone calls. Some state insurance departments publish price guidelines, which is helpful for comparing to see if you’re getting legitimate quotes.

Weigh Your Options

The reason you have insurance is to protect yourself in the event of an accident. Medical bills and legal fees can be astronomical, so consider how much coverage you need carefully. It’s more important to have enough coverage than it is to carry a low deductible, which is more costly. Tweak your quotes to see how much coverage you can get, while at the same time raising your deductible.

You've heard stories of financial catastrophe in the news, so how can you prevent credit card fraud from affecting you? A little prevention and research can go a long way toward your safety. By protecting your sensitive information and maintaining good habits, you can thwart potential criminals from escaping with your hard-earned cash. But first, let's dive into some of the most common methods of credit card fraud that every consumer should know for savvy spending.

Types of Credit Card Fraud

Credit card fraud is an international problem, and the United States experiences the third highest rates of fraud in the entire world! In fact, almost 30 percent of consumers have dealt with this agonizing problem within the last five years. What are the types of fraud that you may encounter?

• Phone or Mail Order: This fraud occurs when you make purchases through either the telephone or through mail order catalogs.
• Online Shopping: Your credit card details may be stolen while making purchases online in an insecure environment or fraudulent site.
• Online Banking: False links through email, text messages, or malware can steal your bank account information.
• Face-to-Face: Your card or PIN number may be stolen and used in a physical store.

Fraud Techniques

As you can see, there are tons of different avenues that thieves use to steal your credit card information. But there are a wide variety of techniques they can use to complicate matters even more.

When you have graduation money in the bank, it may be tempting to head on a shopping spree. And while every graduate deserves something special for completing such an important goal, we encourage you to think ahead! From college savings to dorm decor, you can put yourself in a great position for the future if you use that graduation money wisely.

Savings

Dropping your graduation money into a savings account may not be the most exciting option in the present, but this smart decision can be a major asset for the future. Consider stashing a portion of your grad cash into a savings account as a small nest egg for the future. You can use that money to cushion the blow if you run into financial mishaps, like unexpected car expenses or tuition hikes. Even a small rainy day fund can prevent major headaches in the future!

School Supplies

If you're college-bound, consider diverting some of that graduation money into your freshman year school supply fund. Get a head start on the crowd by looking for your books early. Used copies sell out fast, and you can save a lot of money by securing your reading list early. You might also think about upgrading your computer before you head out to college. Look for fast, dependable, and portable models over the latest fads. You'll spend countless hours behind that computer screen, so be sure to get one that you can count on.

There are many different types of credit cards out there. Which one should you choose? You never want to leave money on the table, and it’s easy to be swayed by the idea of airline points, cash back, or a free balance transfer. Take the time to understand the fine print and pick the one that’s best for what you need.

Travel and Airline Credit Cards

These are ideal for consumers who travel frequently. Narrow down the ones you’re looking at to the airlines you like to fly and where they travel, and then compare how points are earned, how many you need for a ticket, interest rates, and annual fees.

0% APR Credit Cards

If you’re in a situation where you need to make a large charge that you can’t pay off right away, a 0% APR credit card might be a good solution for you. These types of cards save money in finance charges because they offer zero percent interest for an introductory period.