No one wants to be in debt and no one definitely tries getting in debt in the first place. Unfortunately, debts are one of the things that can happen without you even noticing them. Sometimes, you might even feel as if your debts are no longer within your control.

The good news here is that it is very much possible and doable to stay out of debt. The following are the top 5 ways on how to avoid debt once and for all.

1: Focus on Your Needs and Get Rid of the Wants

There will always be more than enough room in your regular budget to remove those unnecessary expenses and spending habits. It can be cutting down on those online shopping sprees or enjoying that premium coffee at your favorite cafe only once a month. Your finances will be so much better if you shave away some of your wants and just spend only on your needs.

2: Plan a Budget to Make Things Better

You will be able to track better where your money goes and where you can still afford to spend this when you plan and budget your expenses every month.

Decide every month how much you will put in your 401(k) and in your savings and how much extra money is available that you can allot for other necessities. If ever the time comes that you need to do some major cut down on your expenses, it will be easier for you to determine where you need to make the cut. There are handy tools online that you can use to help you automate the process of budget on your behalf.

3: Prepare a Fallback Emergency Fund

It is very critical to have emergency savings for “just in case” situations. The best practice when it comes to developing emergency savings is to save up a minimum of 6 months worth of your salary. This can help cover expenses if ever you suffer from an injury that can prevent you from working, if you lose your job, or if the time comes that you need cash for a necessary but unexpected cost.

4: Don’t Buy Something If You Cannot Afford It without Using Your Credit Card

The most common danger of having a credit card is that it can make you live under the illusion that you will be able to afford anything even if you don’t have the money to afford it. The general rule of thumb here is if you cannot pay for something in cash, it only means that you cannot also afford it with your credit card.

5: Make Full Payments for Your Credit Card Balances

The best and easiest way to curb your spending habit is to always pay for your credit card balances. This means that when you buy something using your credit card for the purpose of earning rewards, for example, you have to make sure that you have the payment sent the following day way before life gets too busy and you forget all about it.

We are hoping that you found this very helpful for understanding Top 5 Ways to Avoid Debt.