How to use credit in a crisis

HOUSTON – If you have more bills than you have money to pay them right now, you are not alone. During tough financial times, there is a smart way to use credit just to stay afloat.

“The Budgetnista” Tiffany Aliche has lived it first-hand.

“I remember in the 2008-2009 recession, it was because of credit that I was able to see myself through,” she explained. “I actually went and got extra credit cards as a safety measure so I would have food to eat and a safe place to stay.”

If you’ve recently seen a drop in your income and your credit history is good, Tiffany suggests applying for a new credit card now.

“It’s not something I encourage you to do unless you have no other choice,” she said.

She says that new credit card can help you pay some of your essential bills like utilities, gas, transportation, groceries, medication, medical bills and even insurance. Paying these bills on credit will allow you to keep what limited cash you have for the bills you can’t pay with credit.

Now is not the time to pay down debt unless you have six months of emergency savings.

“Once you have that, then you can become more aggressive with paying off debt. Because debt-free and no savings, equals debt,” explained Tiffany.

  • Make sure you keep paying at least the minimum payment on your credit card each month.
  • Do not resort to cash advances. Those come with much higher interest rates; and they can ruin your credit.

You can try Tiffany’s free Live Richer Challenge. It offers challenges to help you reach your financial goals in 22-36 days.