Sometimes, the only way to stop a snowballing problem is to go
back to the top of the hill and find out what started it.

If you're up to your eyeballs in credit [1] card debt [2], take a step
back and recount your money [3] missteps. Knowing your weaknesses could
help prevent you from falling back into the bad credit [1] pit and show you
a way out.

According to Gail Cunningham, vice president of business [4]
relations at Consumer Credit Counseling Service of Greater Dallas, a
nonprofit financial management service, consumers mired in debt [2] make
common financial blunders, most of which they can prevent with
discipline and behavior changes.

Learn from these mistakes and start paying off your debt:

1. Misusing balance transfers.
2. Not checking credit [1] reports -- you can't change them
   anyway.
3. Failing to alert creditors about a financial hardship.
4. Thinking of "budget" as a dirty word.
5. Using retail store credit [1] cards to make use of discounts.
6. Procrastinating on creating an emergency fund.
7. Paying bills in no particular order.
8. Charging purchases instead of paying in cash or with a
   debit card.
9. Making credit [1] payments late.
10. Making the minimum payment only.

Bad Habit No. 1: Misusing balance transfers

Transferring balances on high-interest cards to lower-rate
cards can be an effective technique, but it's easy to make it a good
idea gone wrong. Transfer a balance onto a card with a low introductory
rate, and you can potentially save money [3] on interest if you refrain
from charging on it and focus on paying off the balance before that
introductory rate expires. But most people continue to charge on the
new card and wind up with more debt [2] once the teaser rate expires, says
Cunningham. In fact, new purchases may pull an altogether different
interest rate. Read the fine print very carefully, and only attempt the
balance-transfer maneuver if you can control your spending on the new
-- and old -- card.

Try this: If you can't refrain from charging, balance
transfers won't get you out of debt [2]. If you're really in the hole,
consider getting a part-time job and dedicating your earnings to your
debt [2] load. If that's not possible, go back to your budget [5] and cut back
on unnecessary expenses such as restaurant outings and cell phone
extras. Put the money [3] you save toward paying off your balances. Pay for
new purchases with cash or a debit card.

Bad Habit No. 2: Not checking credit [1] reports -- you can't
change them anyway

Wrong. If you have credit [1] cards, pull your credit [1] report at
least once a year and check it for errors. Purging your record of
inaccuracies can be crucial for getting better interest rates, landing
the job you desire and stopping an identity thief from ruining your
credit [1] rating. Your credit [1] report also affects your credit [1] score, which
determines how high your interest rates will be on future loans.
Dispute anything you think should not be there. The Fair Credit
Reporting Act allows for the correction or deletion of inaccurate,
outdated or unverifiable information, provided that a reinvestigation
into the disputed data sides in your favor. Unfortunately, negative but
truthful data must stay put. A Chapter 7 bankruptcy filing, for
instance, will remain on your credit [1] report for 10 years, a Chapter 13
for seven years.

Try this: You can
request one free copy [6] from each of the big
three credit [1] reporting bureaus, Experian, TransUnion and Equifax, every
year. Why bother? Errors on your report [7], such as a
payment marked late that came in on time, could raise your interest
rates, lower your credit [1] score and affect your ability to obtain credit [1]
in the future.

If you do find a mistake, send a correction letter [8] to each of the
credit [1] bureaus that show the error. Experian allows you to dispute errors online [9], as do TransUnion [10] and Equifax [11].

Don't bother with so-called credit-repair
clinics that aim to charge you hundreds or thousands to fix your credit [1]
record. "Anything you can legally do to repair it you can legally do
for free," says Cunningham. Of course, if you're not willing or
dedicated enough to write those letters and follow up with the
credit-reporting agencies, paying someone else to do it for you may not
be such a bad idea. Better to have someone dispute the errors rather
than no one. But be extremely careful in selecting such an organization
-- try to get referrals and seek out others who have been satisfied
with the service.

Bad Habit No. 3: Failing to alert
creditors about a financial hardship

You
heard the rumor: Layoffs are coming to a department near you next week.

Don't wait until it happens to worry about
how to pay your bills. Do some damage control right away.

Try this: "The best
time to negotiate is before the problem spirals downhill," says
Cunningham. Call the credit [1] card company and explain the problem you're
about to have. Ask if they could temporarily lower your interest rate
or extend your payment deadline. Some issuers have in-house help
programs that provide such short-term services to customers.

Bad Habit
No. 4: Thinking of "budget" as a dirty word.

The word may call to mind
tedious self-trickery meant for those with low incomes, but everyone
could benefit from deciding on certain amounts for spending, and
sticking to the amount no matter what. It also makes sense to budget [5]
for known future expenses, such as quarterly insurance [12] premiums,
college textbooks and rent. Not saving up in advance means you'll have
to charge expenses or cut into funds set aside for necessities. Budget
these fixed costs while you can handle small financial pinches.

Try this: To find out
what's draining your finances, keep track of where your money [3] goes for
a month. Use a spreadsheet, financial software or a pen and paper and
categorize your expenses. Doing this will reveal whether you're
spending too much on expenses you could trim, such as restaurant
outings and gas. Then you can consider cooking at home more often or
consolidating driving trips. Cut back as necessary without cutting out
expenses important to you. Cunningham suggests that if you enjoy
watching TV, but don't tune in to a majority of the 300-plus channels
you have, consider cutting back on your cable package instead of
cutting out TV altogether.

For a detailed household spending plan,
try our home budget [13] work [3] sheet. Or, get
help creating a budget [5] with our budget [14] calculator. Plan for future
costs by figuring out the total amount you'll owe and divide by the
number of months you have until that day, says Cunningham. If you have
money [3] due next month, divide by the number of weeks you have and save
that amount every week.

Bad Habit No. 5: Using retail
store credit [1] cards to make use of discounts

Chances
are, that card carries a high interest rate you'll be forced to deal
with if you don't pay off your balance each month.

Try this: If you must
charge your purchase, use your general-purpose credit [1] card, says
Cunningham. If you can't pay off the balance, at least you'll pay a
lower interest rate. Limit the total number of credit [1] cards you have to
just two, if you can: one you can pay off each month and one with a low
interest rate for those large purchases you'll pay back over time.

Bad Habit
No. 6: Procrastinating on creating an emergency fund

Learn to save for financial
emergencies. Even if you feel robust and invincible, a single [15] emergency
room trip or car accident could force you to put large balances on
credit [1] cards, causing interest to accrue and more debt [2] to pile up.
"That rainy day will happen," Cunningham says. "It's not a matter of
if, it's a matter of when." If your tire goes flat and you can't pay
upfront for the replacement, for instance, you're stuck with charging
it or reducing funds earmarked for necessities. That's where the
emergency fund fits in.

Try this: Maintain an
emergency fund of at least three to six months' worth of living
expenses, and keep your insurance [12] policies up to date. Work toward that
goal by socking away 10 percent of your take-home pay each month in a
liquid savings account, says Cunningham. If you receive a raise or
bonus, add that money [3] to savings. Since you're not used to the extra
cash flow, you won't miss it.

Bad Habit
No. 7: Paying bills in no particular order

While the order may not matter
if you can pay all the balances, it will matter if you fall short one
month. Say you pay off the balances on your credit [1] cards first, then
find you can't make the minimum on your house payment or monthly rent.
You've put the roof over your head at risk. 

Try
this: "Pay for
living expenses first," says Cunningham. After the house or rent
payment, necessities such as utilities, groceries and medical [16] care
should top the priority list. Next comes the car payment -- you want to
avoid repossession, obviously. On down the line, secured loans and
co-signed debts follow in importance, then unsecured loans and credit [1]
cards. "Ideally, everyone can get paid, but if a choice has to be made,
paying in this order will do a better job of keeping the home life
stable."

Since
bills often aren't due in this order, you'll need to work [3] out a payment
schedule and set aside money [3] from each paycheck.

Bad
Habit No. 8: Charging purchases instead of paying in cash or with a
debit card

How many times have you charged services or
merchandise when you had the money [3] to pay with cash or debit?
Insignificant purchases of $20 and $30 made several times over can
quickly add up, particularly if you already carry a balance. Balances
you can't pay off each month mean paying interest charges and,
subsequently, more money [3] for items you could have bought outright,
interest-free.

Try this: Make a habit
of paying for purchases under $50 with cash, debit or check. Knowing
that the money [3] has to clear the bank sooner could help curb your
spending habits. Just be sure to check your balance regularly to ensure
that you have enough funds.

Bad
Habit No. 9: Making credit [1] payments late.

After all, it's only a $39 late fee. Besides wasting money [3] you could've
put toward the balance, a payment that arrives at least 30 days past
due can throw your account into default and triple your interest rate.
Plus, other creditors may start charging you a default interest rate as
well, thanks to a universal default clause [17] buried in
your contract. "Creditors are constantly reviewing your credit [1]
activity, and if they see you falling behind with one creditor, even if
you have a perfect payment history with them, they can raise your
interest rate," Cunningham says.

Try this: On a
calendar, mark upcoming paydays and payments that should come out of
that paycheck, she says. If you're mailing payments, send them seven to
10 business [4] days in advance. Better yet, sign up for online bill pay.
Just check that the address on file and the address on the statement
match, or the payment might not arrive on time. If you're still late,
call the creditor, explain the situation and ask them to forgive the
late fee. Check your credit [1] report and be sure the information shows up
correctly.

Bad
Habit No. 10: Making the minimum payment only.

Paying the minimum is better than paying nothing, but it doesn't do
much to pay off most balances and forces you to keep paying interest.
By paying interest on interest, you lose any savings from buying a
dress on sale, Cunningham says.

Try this: If you can
afford to pay more or in full, go ahead and pay as much of the balance
as you can. You never know when you're going to have a tough month. Pay
in full every month and you can avoid interest charges altogether.

Or, if paying more than the
minimum proves difficult, consider working an extra part-time job or
decreasing your expenses -- or both, says Cunningham. Put all of your
extra earnings toward the debt [2]. Use our minimum payment calculator [18] to see
how much you're saving in interest charges.

Bankrate.com [19]
is the Web's leading aggregator of information on financial products
including mortgages, credit [1] cards, new and used automobile loans, money [3]
market accounts, certificates of deposit, checking and ATM fees, home
equity loans and online banking fees. Visit Bankrate.com [19]
to get the tools and information that can help you make the best
financial decisions.