Credit card debt isn't always the result of irresponsible spending; many times it piles up because of emergencies, such as unforeseen car or medical expenses. One way to avoid having to use your credit card in a pinch is to start saving for an emergency fund.
While you may want to pay off those student loans and car loans as soon as possible, sometimes making the minimum payment is the best option in order for to build a safety net. Doing this will keep you in good standing with the lenders, rather than skipping payments and hurting your credit score, and will gradually help you create an emergency fund.
Kiplinger, a personal finance magazine, recommends that consumers have a cushion that will cover at least three to six months of living expenses. For example, this money could keep you afloat in the midst of a natural disaster, such as a wildfire or earthquake.
"Keep receipts for your lodging, food and other living expenses while you're away from home, so you can seek reimbursement from your insurer," says the news source. "Also, keep some cash on hand in case of a disaster, because you could have a tough time finding a working ATM once it occurs."