Only keep open lines of credit, or credit cards that you absolutely need! If you have more than 5 credit cards, then you probably have too many open lines of credit. Most people don't realize the negative impact that open lines of credit create. When banks review your credit history or determine whether you qualify for a personal loan, mortgage, or auto loan, they always look at how many open lines of credit you have. A bank is determining their risk in loaning you money, and with several open lines of credit their risk is increased based on the available credit on each card that a customer has. If they determine that there is too much risk in loaning you money, you may not get the loan.

An alternative to credit cards - get yourself a debit card. Generally if you do not have the money available in your checking account, you can't spend it! This is a great strategy for controlling your monthly expenses, and only in an emergency will you have to use a credit card. For instance if a unusual expense arises like a car repair or a home appliance breaks and needs replacement you have the ability to take care of it. This strategy allows you to be comfortable knowing that you have not spent money on things that you want but probably don't need.

Be sure to review the credit cards that you do keep open to be sure that you are paying the lowest interest rates possible. Remember that over a period of one year, paying 15% interest instead of 10% on a balance of $10,000 or more can mean throwing over $500 away each year. For most people that would cover their utility bill for several months, or gas for their car for over six months!!!!

There are several other ways to protect yourself from some of the pitfalls of credit cards and overextending yourself with excess bills. Be careful when making purchases at a Department store especially around the Holidays when they offer you a credit card and give you 10 or 15 percent off your first purchase. It may sound like a great offer at that time, however you will be opening another line of credit and ensuring that next month another bill will be arriving in your mailbox! If you do not have the money to make that particular purchase, maybe you should think twice about it. However, if it is absolutely necessary, then use a credit card that you already have instead of adding another piece of plastic to your wallet.

One additional way to use credit wisely comes from an area that most do not consider, but in most cases is the biggest credit risks for all of us. It comes from the homes we live in, the apartments we rent, and the cars we drive. Remember unless you own your home or car, you are being issued credit to allow you to have shelter and transportation. Although these are necessary items, the best advice is to live within your means. The two biggest bills you receive each month will most likely be your mortgage or rent and your car payment. The lower these two bills are, the more money you will have each month for other expenses or to pay off your existing debt.

Our final tip is Pay Yourself First!!! That's right, force yourself to save some money each month either by opening a savings account, retirement account, or investing in stocks, mutual funds, 401K plan, or any other investment that allows you to accumulate money each month. We all get in the habit of paying our bills each month, and forget to pay ourselves first. In most cases, if you find a way to put some money away for yourself, you will find that you are still able to pay your bills. This may be difficult at first, but if you cut back on some of the other areas that are causing you to spend money - like eating out two nights a week instead of maybe once a week, you will find that you can save some money. It is important to start saving now because wealth builds over time, and the longer the time horizon (25 years instead of 10 years), the more savings you will accumulate. This will also provide you with some financial independence, which will not only build money but also confidence! The more confidence you have, the more you will find yourself looking for other ways to make and save money. It is up to you to find a quality of life that you are happy with, and always keep in mind that failing to plan means you can most likely plan to fail!