Avoiding and managing debt is key if you want to live a stress-free life. We discuss the nine best ways to avoid debt for the future, whether it is credit card debt or debt from your education.
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How do I avoid debt?
This is a question that many people – specifically millennials – have on their minds. Millennials – those born in the 1980s and 1990s – entered the workforce during the worst economic downturn in the world. This left them scrambling to make ends meet and barely able to afford the bare necessities of life. Unfortunately, many of these young adults were left to deal with crippling education and credit card debts in an ever-worsening economy. The never-ending pressure from creditors and banks to pay overdue bills can be nerve-wracking. The best way to avoid debt is to understand what it is. After that, you can go about managing your current debt while taking proactive steps to avoid debt in the future as well.
Let’s start from the top and understand what owning debt means for you.

What is debt?
Debt is the money you borrow from someone else to pay off an existing expense. It is used by many individuals and organizations to make large purchases that their circumstances do not currently allow them to afford. Debt is given on the condition that the borrowing party will return it within a specific timeframe, usually with interest. The main goal of interest is to ensure that the borrower makes efforts to repay the loan as quickly as possible to limit their overall interest expense.
Here are some of the most common forms of debt:
- Credit card debt
- Personal loans
- Education loans
- Mortgages
- Auto loans
- Business loans
How to Manage and Avoid Debt at All Costs
The best way to avoid debt is simply to be careful managing it in the first place. Avoiding debt requires you to build a concrete financial and budget plan. You have to adhere strictly to your plan, no matter what type of debt you have. It takes patience. But with enough effort in the right direction, you can effectively avoid debt and steer clear from it in the future. For example, it is very easy to accumulate huge credit card debt by making impulse purchases. But acting on short-term pleasure can have long-term detrimental consequences.
Below, we will talk about nine ways to avoid debt and keep yourself from going bankrupt.
1. Recognize How Much Debt You Have
First things first. Calculate how much debt you have. Make a list of all your loans and the accompanying interest rates with those loans. Focus on paying off the ones that have the highest interest rates first, or those with variable interest rates. Try not to pay big amounts for one debt at once. You can keep your payments minimal but be consistent with them. Depending on where you live, if you do not have a job, you might be able to defer payment on your loans for a certain amount of time.
Always ask the loan company about the best options for you instead of doing things on a whim.
Emergency Funds – How to Build Your Emergency Savings
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2. Build a Fallback Emergency Fund
The importance of building an emergency fund cannot be stressed enough. To avoid debt, it is always helpful to have a fallback emergency fund. It adds that extra layer of security to your finances. Unexpected circumstances, such as sudden job loss or medical expenses, can quickly add up. As a result, these emergencies can contribute greatly to your debt and have far-reaching consequences for your life. Therefore, as a general rule, save six months’ worth of total living expenses as emergency funds in your savings account. This would give you something to fall back on and recover when times are tough. Even putting away only $50 per month is a step in the right direction. This money can quickly add up and become a lot more if you stay consistent. This article can be helpful.
3. Avoid Debt for the Future
It is never too early to start building your savings. Therefore, always remember to save early and often. This lets you deal with whatever life throws at you. You are better equipped to deal with emergencies and economic downturns. Along with providing a safety net for tough times, saving early also helps you to create positive habits related to money. You can invest the money that you save and take advantage of compound interest, which will make your money grow exponentially.
4. Save Early to Avoid Debt
It is never too early to start building your savings. Therefore, always remember to save early and often. This lets you deal with whatever life throws at you. You are better equipped to deal with emergencies and economic downturns. Along with providing a safety net for tough times, saving early also helps you to create positive habits related to money. You can invest the money that you save and take advantage of compound interest, which will make your money grow exponentially.
Further reading: #5 easy money-saving challenges that work
5. Avoid Credit Card Debt – Buy Only What You Can Afford
Credit card debt is one of the most common types of debt that people incur. This is because it is the easiest one to fall into. According to the U.S. Census Bureau, an average household in the U.S. holds about $5,700 worth of credit card debt. To avoid credit card debt, a good rule is to buy only what you can afford. Buying something when you can’t even afford it is not a good financial pattern to fall into. You can start by following the roadmap that I share in my book “Financial Planning for Her”. For instance. This rule is simple to follow, which makes it easier to stick to it.
6. Pay Off Your Credit Card Balances on Time
To avoid accumulating credit card debt, never be late with your payments. If you don’t make your credit card payment on time, you will incur fees. Moreover, you will have to suffer from higher interest rates.
This could start a never-ending cycle of debt. Not only will this hurt you financially, but it will also make you look irresponsible to lenders. For this reason, always make sure to pay off your credit card balance in full every month. Try and pay the whole thing off. If possible, pay more than the minimum. This will reflect positively on your credit score, too.
7. Build a Budget
Always build a strong budget if you want to avoid debt of all kinds. By budgeting, you map out your monthly expenses in advance. A budget tells you where your money is going and where it should be spent.
Every month, make a budget of how much you made and saved, and how much extra you have left. Write down each expense, even if it is as small as $1. This will help you cut your expenses and make the most of your money in the future. If you want an in-depth and interactive look at budgeting and other fundamental concepts of personal finances, check out this article for more ideas. It is the perfect starting point for ladies who want to take charge of their finances and aren’t afraid to put in the work to achieve the life of their dreams.

8. Create a Financial Planner and Stick to It
A financial planner allows you to plan all your expenses and income in one place. You can take care of your salary, debt, and savings in a single planner. This makes it easier to make updates every month. In addition, a financial planner helps you visualize everything and realize your overall net worth. This is also great if you have multiple accounts and cards. A financial planner can help you ensure that you make payments in full and on time. My Money Planner for Her is designed for this very purpose. You can get everything in one place, allowing you to get a full picture of where you stand financially. This helps you make financially sound decisions and avoid debt.
Further reading: How to Achieve Your Money Goals
9. Know the Signs of Credit Card Debt
Credit card debt can creep up on you unexpectedly, but there are a few telltale signs and red flags to keep an eye out for.
To avoid credit card debt, look out for these signs:
- Your creditors regularly call to ask for payments.
- You make minimum payments on credit card bills.
- Your credit cards are maxed out every month.
- Your bank account is usually at $0, or sometimes even below.
- You have no extra money left after paying the necessary bills.
- You have taken an advance on your paychecks.
The Bottom Line
It can be hard to limit your purchases. With so many options, it is only natural to be tempted to spend money. No one actively tries to be in debt. But in this day and age, we are used to being consumers. It is just one of those things that happen. And the hardest thing about finding ways to avoid debt is that you have to limit these expenses, which can be a lot sometimes! However, with these financial strategies, you can avoid all kinds of debt and make sure you prepare well for the future.
If you enjoyed this article on Avoid and Manage Debt – 9 Useful Strategies or have any questions for me, please feel free to leave them in the comment section below!
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