These 4 Golden Rules Will Keep You Out Of Debt

Debt can be a very scary thing that haunts your life for many years.

Without wanting to sound too dramatic, debt can ruin lives and turn your world upside down. A little debt is OK, but you need to know how to keep yourself out of lots of debt. 

In this article, we'll show you a few golden rules to avoid debt as much as possible. Before we begin, we must preface this with two points: 

  • It's almost impossible to avoid debt altogether, but these tips will help you keep it at manageable levels
  • This is not financial advice. These are tips based on what has worked for other people. If you are worried about debt, speak to a professional financial advisor for legitimate financial help

With those two things out of the way, let's look at how to keep yourself out of debt: 

Set up a monthly budget

The first step in achieving financial stability is setting up a monthly budget. This outlines a few key things: 

  • How much money you earn
  • How much money you need to spend
  • How much “extra” money you have leftover

Take your monthly income and subtract your essential expenses from it. This will include everything you need to pay each month, such as energy, groceries, transportation, phone bills, etc. 

From here, you should be left with a sum of money. This can be used for non-essential expenses like clothes, treats, etc. The purpose of a budget is to allocate how much of this cash will be used for non-essential costs and how much is set aside for savings. 

Generally, most financial experts recommend saving at least 20% of your income. So, take your payment, work out 20% of it, and subtract it from the leftover money. The amount you're now left with will be put towards the non-essentials. This doesn't mean you need to spend all of it, but it will be how much you can afford every month after your essentials are paid for and you've saved money. 

Your budget helps you avoid debt while controlling expenditures and ensuring you have money left in your account. It also allows you to set money aside for savings, meaning you could create an emergency fund to pay for unexpected expenses that may crop up. Therefore, you decrease the likelihood of turning to credit options like payday loans. 

Save money wherever you can

Staying on the budget topic for a moment, there are ways to make yours go further. You can give yourself more “extra” money at the end of each month by saving cash wherever you can. Some examples include: 

  • Switching energy providers to get a cheaper bill
  • Taking out a more affordable phone contract
  • Buying discount groceries from a more affordable store
  • Being more energy-conscious at home to reduce your energy bills

There are dozens of ways you can cut down on your expenses, which eases the pressure on your budget. After taking out the essential costs, you may discover more room to save even more money. Instead of 20% of your salary, you could push this to 25%. 

Again, spending less puts less strain on your finances and means you're not in bad situations where you don't have enough money to pay for things. You can manage all your bills to avoid debt while having backup cash if something happens. 

Learn how to use credit cards correctly.

Did you know that credit card debt is widespread and is one of the most damaging forms of debt out there? 

It's sadly true, but it doesn't have to be this way. Keep yourself out of debt by learning how to use credit cards correctly. It's not rocket science; follow these golden rules: 

  • Don't set a ridiculously high credit limit
  • Only buy things you can afford
  • Pay your bill in full, on time, every month

These three steps will ensure you have a clear monthly credit card bill. Meeting the full payment means you don't have to pay interest rates or fees – you're just settling for what you bought on the card. That's what's critical: only to buy what you can afford so you have the funds to repay it. 

Funnily enough, this then goes back to budgeting! Having a budget and saving money will ensure cash in your account to pay monthly credit card bills, thus avoiding debt! 

Don't break the law.

This sounds like a piece of obvious advice, but what does it do with debt? 

Well, there are many instances where breaking the law can land you in tricky financial situations. If you’re ever arrested for committing a crime, you must post bail or face prison as you await trial. In turn, you’ll likely need bail bonds to meet the bail, which usually costs a fee. Sometimes, the fee is big enough that it has a knock-on effect on your finances and may cause you to seek out extra credit to cover it. At the same time, if you’re convicted of the crime, there are other bail fees to pay. If you forfeit the bail by missing court appearances, you may have to pay it all in full! 

This is a more extreme example, so how about a simpler one? You get caught speeding or parking in the wrong place, and a ticket is written up. You’re fined money, and it’s quite a lot more than expected. Suddenly, an unexpected payment is due, which can trigger problems in your finances. Even with a good budget, you might not have enough money to pay the fines, meaning you have to turn to a loan. 

So, while it sounds obvious, don’t break the law if you want to stay out of debt. 

As mentioned in the introduction, you should use these rules as simple tips to aid your goal of avoiding debt. If you need serious financial help – budgeting or getting out of debt – consult a licensed financial advisor as soon as possible.

Understanding the Importance of an Emergency Fund

Establishing a robust emergency fund is one of the most advanced and affordable strategies to avoid debt. This fund acts as a safety net, ensuring you have a stash of cash to cover unexpected expenses. Your emergency fund should ideally cover at least three to six months' essential costs. With months in place, you can avoid relying on costly credit options or loans during unforeseen financial challenges.

The Role of Financial Education

Financial literacy is a building block to a debt-free life. By understanding the basics of money management, savings, and credit, you can make informed decisions that prevent unnecessary debt. Consider enrolling in financial classes or workshops. These educational tools equip you with the knowledge to navigate the complexities of personal finance, helping you recognize and avoid potential pitfalls.

The Dangers of Impulse Purchases

Impulse spending is a common factor that leads to unnecessary debt. While buying that extra pair of shoes or the latest gadget might be tempting, it's essential to differentiate between tests and needs. Before making any purchase, ask yourself if it's necessary. By avoiding impulit'suys and sticking to your budget, you can ensure that your spending remains within manageable limits.

The Power of Negotiation

Many people don't realize that some expenses can be avoided. There's often room for discussion, whether it's a phone bill, a medical payment, or a fee. By taking the time to communicate with there's providers and negotiate costs, you can save significant amounts of money, further ensuring that you stay out of debt.

Seeking Professional Financial Advice

While the tips in this article offer general guidance on avoiding debt, everyone's financial situation is unique. If you struggle or are unsure of everyone's financial decisions, seeking advice from a professional financial advisor is wise. They can provide tailored strategies and solutions to ensure your economic well-being.


In today's world, debt has become a looming shadow for many. The article highlights the significance of steering clear of overwhelming debt and offers golden rules to achieve this. The content provides actionable insights, from the importance of setting a monthly budget and saving money wherever possible to correctly using credit cards and the repercussions of breaking the law. Additionally, the importance of an emergency fund, financial education, avoiding impulse purchases, the power of negotiation, and seeking professional advice are essential components of a debt-free life.

Frequently Asked Questions

What is the best way to start avoiding debt?
The best way to start is by setting up a monthly budget, understanding your income and expenses, and saving wherever possible.

How can an emergency fund help in avoiding debt?
An emergency fund acts as a safety net for unexpected expenses, preventing the need to rely on loans or credit.

Is it essential to seek professional financial advice?
While general tips can help, everyone's financial situation is unique. It's wise to seek advice from a professional financial advisor.

How can I differentiate between essential and non-essential expenses?
Essential expenses, such as food, shelter, and basic utilities, are necessary for survival. Non-essential expenses are luxury or discretionary items.

Why is financial education important in avoiding debt?
Financial education equips individuals with the knowledge to make informed financial decisions, recognize potential pitfalls, and navigate the complexities of personal finance.

How can impulse purchases lead to debt?
Impulse purchases can strain your budget, leading to overspending and the accumulation of unnecessary debt.

What are the benefits of negotiating expenses?
Negotiating can reduce costs, helping you save money and avoid potential debt.

How does a credit card work?
A credit card allows you to borrow up to a specific limit, which you'll need to pay back with interest if not settled within the grace period.

What are the consequences of not paying credit card bills on time?
Late payments can lead to additional fees, increased interest rates, and a negative impact on your credit score.

How can breaking the law lead to debt?
Legal issues, such as fines or bail, can lead to unexpected expenses, potentially pushing individuals into debt.

Is it possible to live an utterly debt-free life?
While challenging, reducing my existing debt with careful financial planning, budgeting, and avoiding unnecessary expenses is possible.

Consider strategies like debt consolidation, negotiating with creditors, or seeking professional financial advice.

What's the difference between good debt and bad debt?
Good debt is an investment that will in value or generate long-term income. Bad debt is something that quickly loses weight and does not generate revenue.

How can I improve my credit score while avoiding debt?
Pay your bills on time, reduce outstanding balances, and avoid taking on new unnecessary debt.

What are the dangers of payday loans?
Payday loans often come with very high interest rates and can lead to a cycle of debt if not repaid promptly.

How To Efficiently Grow Your eCommerce Business

How To Efficiently Grow Your eCommerce Business

Reels Vs TikTok: How Brands Can Make The Most Of These Platforms

Reels Vs TikTok: How Brands Can Make The Most Of These Platforms

Take the Free Quiz
ecommerce fastlane crowdspring quiz blog
Take the Free Quiz
ecommerce fastlane crowdspring quiz blog
You May Also Like
payday loans loans for bad credit
where can i buy clomid buy clomid