5. You are saving less than 10% of your gross income. If you look at your savings and you're not comfortable with what you see, it could be that you are spending (and charging) more than you can afford. Ideally, Lazarus says, you should be saving 10% or more of your gross income. For example, if you earn $3,000 every two weeks and get paid $2,300 after taxes and other deductions, you should be able to save at least $300 every two weeks. If you find that goal hard to achieve, fewer credit cards or none at all might be the way to go. "Less or no credit is better because you will avoid overspending, underpaying, incurring excessive interest and reducing your credit score," Lazarus says. Next steps: If, after reading this, you are convinced you have too many credit cards, should you then start closing accounts? How do you know which cards to keep? If you are looking to cut the number of credit cards you own, Howard says the first ones to go should be store credit cards, specifically those not carrying the logos of MasterCard ( MA), Visa ( V) and American Express ( AXP). "Store credit cards are easily given to individuals with low creditworthiness," Howard says. "Once you have MasterCard, Visa or American Express, you need to start thinking about closing those store cards, because they will only hurt you during a loan application process."
Closing credit cards, however, should not be done all at the same time. Note that each time you close a card, you will take a small hit on your credit score. Howard's advice is to allow a six-month interval so your credit score could recover before the next card is closed. Lazarus suggests keeping credit cards that have no annual fees, no overseas transaction fees and offer rebates or cash back. He says the Chase Ultimate Cash Award MasterCard, CapitalOne Visa and American Express Blue are worth considering. "If you're going to use credit, you might as well make the most from it. In today's world, credit card issuers want your business and are willing to reward you for it." If you find that the number of credit cards you have is not a problem, Griffin at Experian says you should be focusing on other financial issues that could be having a greater effect on your creditworthiness. If you find it difficult to curb your spending or use of credit, you may want to check out the National Foundation for Credit Counseling. Another useful resource is AdviceIQ.com, which lists financial advisers in your area. -- Written by Marilen Cawad in New York. >To contact the writer of this article, click here: Marilen Cawad. >To follow the writer on Twitter, go to http://twitter.com/marilencawad. >To submit a news tip, send an email to: email@example.com.