Credit cards

Credit cards are powerful tools for accessing financing and building your credit profile, but you should always make sure to get financial advice before deciding toapply for a credit card.

Keep a Balance Sheet

One of the best tools for a debt management strategy is a balance sheet. Simply put, a balance sheet is simply an easy way to keep track of your income and expenses.

You don’t have to do all of your credit card payments in cash, either. You can simply put your credit card statements on a monthly schedule that keeps you in sync with your monthly bill.

Once you’ve got your balance sheet, here are a few more things to consider before you start taking action:

Use this time to review your account statements for a look at what you’ve paid off, and if anything has gone to collections, consider what’s in the pipeline for your future bills.

For instance, if you’ve spent the month paying off credit card balances or putting off payments on an emergency fund, consider making up the difference on the month you open your next bill.

Use the “Next Year” or “Past Month” labels on bills to figure out your monthly payment schedule. For example, let’s say you have a 30-month plan at 30 months at an interest rate of 6.25 percent. Pay the first 30 months of the plan on the first and last dates of the month and add the balance to the account by that date. When you’re done paying, go over the 30 months again and pay the first 30 months at an interest rate of 6.75 percent. After 30 months, cancel the balance by paying the balance in full at the rate of 6.75 percent.

At the end of 30 months, subtract the cost of your interest-only loan from the cost of your interest-only payment plan. This amount, known as the cost-adjusted rate of return, is the percentage that you would have earned on your investment, assuming the rate of return you could have expected would have continued forever.