Well it goes without saying now, but I will smart when using credit! You should be ordering a copy of your credit report annually to review. The government allows you a FREE credit report each year, but make sure you are using their site.

If after reviewing your credit report there are issues that you need to address you can do it yourself with help at this government site. To help protect your credit you may also want to look in to an identity theft protection program that will alert you as soon as anything changes on your credit report, like a new account. Unfortunately with the onset of identity theft reviewing your free credit report one time per year may not be enough.

A red flag in regards to your credit use is when you are using credit cards to pay for regular monthly expenses like gas, groceries and eating out. The exception to that rule is when you are using a rewards card AND paying off the balance each month.

If you are trying to reduce your credit card debt, which is especially important if your goal is to live on one income and enjoy the benefits of being a stay at home mom, you should try Dave Ramsey's "snowball effect."

Go back to the list of debts and income you created when we talked about budgets. Look at the balances of each of your credit cards or loans. Start with the lowest balance card or loan and pay anything extra you have on that account until it is paid off. Then you take the full monthly payment you were making on that debt and add it to the next smallest account balance's monthly payment you have until that one is paid off and then move on to the next one...keep going you can do it!

Once accounts are paid off do not close the account as that can lower your credit score and impact your ratios (percentage of total of what you owe to your total available balances). You want a low ratio:


Total Balances: $5000
Total Available Credit Lines: $25,000
Ratio: 20%

Total Balances: $5000
Total Available Credit Lines after closing paid off account: $15,000
Ratio: 33%

You should also have an initial emergency fund of $1,000. That way when you have that car repair, flat tire or whatever happen you have the cash to pay for it! I say initial emergency fund because the goal is to keep adding to that fund to bring it to a balance that will cover six months of living expenses.

Use the same thinking when it comes to buying anything too...if you don't have the cash to buy what you want...wait and save for it. Remember wants are different than needs.

Here are some other helpful resources to consider:

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