There is no doubt about it, we are already in hard times here in the United States and in many other countries in the world. But there is no reason to panic. Many people are already in a panic because they are buying into all the media hype. Most people will be able to get through this tough economic time without any problems at all. There are a few pitfalls that we need to avoid though to stay financially stable in these hard times.

The biggest mistake that some people make is to rely on credit to make it through hard times. That is the total opposite of what we should be doing. Having too much debt is what put us in this situation in the first place! The best thing that anyone could do to survive tough times and bad, is to get rid of the debt. Paying off high interest credit cards is one of the best things anyone can do for financial independence.

Now I’m not saying that credit cards are bad altogether. There is a smart way to use them and a horribly stupid way to use them as well. The smart way is to have only one or two major credit cards and to keep low balances on them. It is best to keep the balances below 25 percent of the available credit. I like to keep them below 15 percent though. This will insure a good credit rating when it comes to your credit report.

Now the bad way to use credit cards is simply to overuse them. If you have over 50 percent of your credit line used up you are not headed in the right direction. If any kind of emergency comes up you don’t have the available credit to help you out and you also have to make those payments to the credit card company. Having high credit card bills can be one of the most constricting things on your finances. As long as you can keep these down you won’t have as many problems in hard economic times.

Now a lot of people will say I have to have debt! I have to have a car to drive and I will always have a house note. That is very true for most people and there is nothing wrong with that. You need to factor that into your financial plan at the beginning. It’s just a way of life. The main problem comes in with the extra unnecessary spending like having high interest department store credit cards. They are the worst! I have seen more people get in trouble with these types of credit cards than with anything else. In most cases if they would have just avoided this unnecessary spending and wasted money on high interest payments they wouldn’t be complaining about economic hard times! They would have a cushion to fall back on in times like these.

Think about these things the next time you are in a department store and they ask, “Would you like to save 10 percent by getting a store credit card”? In the long run it will cost you way more than 10 percent!