Taking care of one’s finances is all about making the right choices. And to make the right decisions, you need to know what is good for your finances and what is destructive.

Unfortunately, looking at how society have evolved, the norm may not necessarily be supportive of proper financial management. There are a couple of lies that you may be telling yourself that could lead to your financial ruin. Even if everyone you know is practicing it, that does not mean it is correct. So here is a list of wrong assumptions that you may be telling yourself. See if these apply so that you can correct them and save yourself from making bad financial decisions.

First of all, some people think that saving for retirement can be put off for later. There is no such thing as saving too early. In fact, the earlier you start, the more secure future you will have. You don’t even have to think of it as your retirement money. Think of it as your emergency or reserve fund. This will literally save you from a lot of future disasters. When an emergency expense is needed, you don’t have to borrow money or rely on your credit card to help get you out of a tight spot. You can dip into your savings and save yourself from all the interest rate and overall stress associated with debt.

Another lie that is quite common for people is basing their purchases on what they can afford. For instance, just because you can afford to buy a luxury car, it doesn’t mean you have to. Even if you qualify for a million dollar home, it does not mean you should buy one. If you really want to make wiser spending choices, make sure you only buy based on what you need - not how much you can afford. If you only need something that costs less, then put the extra money on your savings. That is the wisest move that you can make.

Society has put so much importance on material things. Although it can really help make your life convenient, all of that will be overpowered by the debt payments that you have to keep up with. If you want to buy something expensive and is clearly just to appease your ego, then make sure you pay for it in cash. Be more confident about yourself and remove the notion that your money will define your success. You may be surprised that some of the self made millionaires in the country have simple needs.

You don’t really have to live a frugal lifestyle in order to say that you are making the right financial decisions. You just have to make sure that your spending is not ruled by expensive price tags. Keep in mind what you just need and stick to that. You do not have to possess the priciest items to prove your self worth. Live within your means and grow your savings - that is how you can be deemed as a financial success.

A lot of financial problems result from poor financial decisions. Being in debt or having a limited income are only among the few problems that are troubling the average American today. One thing’s for sure, if you want to get out of this predicament, you have to do something about it.

For most Americans, debt is the primary reason for their financial hardship. Their limited income is wasting away on debt payments that they find it hard to stay motivated because they are not really enjoying the fruits of their labor.

Fortunately, there are debt relief options that you can use to help you out of your debt problems. However, it is important that you approach the whole thing smartly. You don’t just choose an option because it gives you the most saving or it gets you out of debt faster. There are various considerations that you need to analyze before you make a decision.

First of all, you need to analyze your finances. That is how you be smart with your debt. To be able to solve your debt, you need to know the problem first. This can be done by creating a budget plan. You need to list down your income and expenses so you can see if you are overspending. That is one of the causes of debt - spending more than what you can really afford.

Through your budget, you will know how much you can afford to pay off your debts. By removing the expenses, you should be able to see your disposable income. Knowing this amount is very important because you get to choose the right debt relief option.

For instance, if your income is enough to cover the minimum payments of your debt or only has a very slight deficit, then debt consolidation programs will be a great option for you. If the deficit is big and you need a reduction on your overall debt balance, debt settlement is the best option. If you can barely meet your basic necessities because your income is so small or you have no income to begin with, then you may have to resort to bankruptcy.

Another way to be smart with your debt relief option is by knowing your priorities and what you want to accomplish beyond your debts. Those in debt tend to focus too much on getting out of it and in the process, they end up choosing the wrong debt relief option. For instance, with bankruptcy, there is a possibility of having your debts discharged in a matter of months. However, it will have some grave effects on your credit score. So if your priorities include putting up a business in the next few years or buying a house, you need to take care of your credit score to accomplish that. That means your choice will have to be either debt consolidation or debt settlement. You just have to grow your income to be able to afford either of the two options.

Think about all your choices and make your selection based on your financial capabilities and your financial goals. This will ensure that you will make smart decisions about your debt relief option.

There is no foolproof way of getting out of debt. All of the debt relief options have successes and failures. The failed attempts have varying reasons that can include being in the wrong program or inability to commit to the program. This is why it is important that you know the risks involved in every debt solution so you can prepare for them and make sure that you will be part of the success statistic.

One of the most frowned upon solutions for credit problems is debt consolidation loans. It is not that the concept is flawed. Financial experts do not make it a first option because it has a lot of potential to go wrong. But if you know what they are, you should be able to avoid them easily.

So what are the risks involved in debt consolidation loans?

First is the risk to grow your debt. This is how debt consolidation through a loan works. If you have mostly credit card debt, you want to make significant payments on your debt without having to pay so much on fees and interest rates. You will achieve this by getting a loan that has a low interest rate. The loan amount that you will target should be big enough to cover all your credit card balance. When your loan is approved, you pay off your credit card debts, thus having them all revert to zero balance.In most cases, people get tempted to reuse their cards simply because the balance is low. They are deluded into thinking that their debts are not so big when all they actually did was to shift the debt around. If you are not careful with your credit card, you may end up growing what you owe.

Another potential risk is losing a valuable asset. There are two ways for you to get a low interest loan: a good credit score or a collateral. These two will make you a low risk borrower. If you do not have a good credit score, you may resort to using a valuable personal asset to lower the interest on your loan. This is probably alright if you have a steady income but if that is suddenly compromised, you may lose the collateral that you used on your loan.

Lastly, there is a risk that you will not really learn your lesson. As important as it is to get out of debt, you want to make sure that you will not land in the same situation again. That being said, you need to identify why you got into debt and how you will ensure that it will not happen again. This is not part of the debt consolidation loan program as it only concentrates in paying off what you owe. It is only upon your own personal effort that you can successfully stay out of debt. Be sure to practice the right financial management skills that includes smart spending habits, savings and budgeting. These are the keys to prolonging the debt freedom that you worked so hard to reach.

Debit cards are becoming popular nowadays because of the negative publicity that debts are giving credit cards. Anyone who intends to make wise financial choices are encouraged to give up the latter for the bad spending habits that it promotes. It allows consumers to purchase items that they cannot afford at the moment. By relying on a future income that may or may not come, they are risking a future filled with debt obligations. Instead of enjoying the fruits of their labor, they have to send it to creditors for products that may have already lost their appeal.

Apart from the ability to buy things without waiting to save up for it, another appeal of credit cards is the safety of not bringing cash. Well if this is the major appeal for you, debit cards can serve that purpose very well.

Debit cards allows you to purchase items without having to carry cash. But unlike the other type of card, you need to put money in it before you can swipe it. In essence, you stock the card with cash before it can be used for any purchase. If you run out of money in your debit card, it becomes worthless until you put more funds in it.

Another benefit of these cards involve reward points. Most stores offer debit cards to loyal patrons to encourage them to make constant purchases. These are coupled with reward points that consumers can redeem later on.

While all of these are appealing, one question remains to be answered: will debit cards help you stay debt free?

The answer to that is yes. You can say that it will keep you from acquiring debt. That is a given fact because you cannot spend more than what is currently on your account. Unlike credit cards, you are actually using money that you have at the moment. You may not be handing over physical cash, but you are spending cash that you own already - just stored in a safe place. That in itself, is one way to implement a cash only purchase without endangering actual money from being snatched from you.

Debit cards also allow the elimination of any fees and interest rate for every purchase that you make. There are fees when using a debit card but this is usually shouldered by merchants and retailers. This is also a great option for people who do not have their own bank accounts (unbanked) or those who have limited access to traditional banking services (underbanked).

While all of these are beneficial, you need to consider if debit cards actually teach us proper financial management skills. In most cases, they do. It is true that parting from actual cash is more difficult and this make you think twice about spending it. This may not be as strong as spending through debit cards but the bottom line is they help you live within your means. As mentioned, you only spend the amount that is on your account.

You just have to be careful about the debit card that you will use because there may be hidden charges that you do not know of. Read through the fine prints to understand if there are fees every time to deposit money, check your balance and so on. Some cards charge a monthly service fee. While the combination of these costs may not be as significant as a credit card, you should be aware of them nevertheless. Make sure your account is FDIC insured to protect the money you will place there.