Consultations available by video and phone with electronic signatures.

How to Stay Out of Debt

You’ve worked hard and – with some strong budgeting and probably quite a lot of sacrifice – you’ve paid off your debt. Congratulations! Now comes the even harder part: staying out of debt and living debt free.

As you likely know, it’s much easier to get into debt than it is to get out. You don’t want to wind up back in debt again and have to struggle to get out, so you’ll need to keep working to avoid future debt trouble. Here are some tips for avoiding debt.

Stay on Budget

If you’ve just paid off your debt, you already know the importance of sticking to a budget. But a budget isn’t just something you use to pay off your debt. It should be something that you stick to regularly. Without a budget, it’s too easy to lose track of where your money is going and overspend.

Track your purchases, create a budget, and stick with it.

It’s also important to revise your budget every so often. Just because something worked for you six months or a year ago, circumstances change, so you’ll want to make sure that your budget still makes sense.

Plan for Emergencies

One of the major reasons people go into debt is because they don’t have a plan to deal with emergencies. Life is unpredictable. Sometimes, no matter what you do, something comes up that will either cost you money or make it difficult for you to earn money. You could find yourself faced with an expensive car or home repair. You could lose your job or be unable to work due to an illness or other issue. If you don’t have money set aside for emergencies, these situations can cause you to quickly fall into debt to cope with expenses.

Now that you’ve paid off your debt, it’s time to add a category to your budget labeled “emergency fund” and put aside some money every month for emergencies. Keep this money in a separate account so that you can’t easily dip into it to fund your lifestyle. You’ll be happy that you did this when something unexpected comes up – and it will!

Curb your Online Shopping

Online shopping is easy, convenient, and – if we’re being honest – it’s often fun. It’s nice to be able to order something and have it show up at your door. However, this habit can often be an expensive one.

To spend less online shopping, there are two simple things that you can do:

  1. Don’t save your credit card information on shopping sites or in your browser and log out of every shopping site you use. The fact that you’ll have to log back, find your credit card, and re-enter it each time you want to buy something will slow you down and cause you to think twice about your purchases.
  2. Unsubscribe from emails that tell you about sales and deals. It’s understandable that you don’t want to miss out on a good price, but these emails are very tempting, and they often cause you to buy things you don’t need. Hit unsubscribe and stick to only shopping when you actually need something.

Know How You’re Going to Pay

Before you buy something on your credit card, know how you’re going to afford to pay for it. Don’t just assume that “you’ll find a way.” Instead, come up with a definite plan. Does this purchase fit into your budget? If it does, that’s great. Just make sure that buying it doesn’t leave you unable to afford other things you’ve budgeted for this month. If it doesn’t fit into your budget, what will you give up so that you can buy it? For instance, if you give yourself $50 a month to spend on clothes, and you see a great pair of pants on sale for $75, they don’t fit into your budget. However, you can still afford them if, for instance, you spend $25 less eating out this month. But can’t afford the pants if you don’t make a cut somewhere else.

Thinking about how you’re going to pay for something before you buy it will also help you really think about the potential purchase, consider its value, and assess whether or not you actually need it. When you’re more mindful about your purchases, you’re a lot less likely to impulse buy things that you don’t really need, and a lot less likely to end up in debt.