How to Avoid Debt to Make Yourself Financially Strong

Last updated on June 17th, 2023 at 06:46 pm

Debt is becoming a normal part of personal finances. In the event of a pandemic where unemployment is hitting record times and people are losing their income, debt is taking its position. 

According to data, the current consumer debt of the US was $16.51 trillion in Q3 of 2022.

While the average American has $96,371 debt on his shoulders.

With several benefits of debt, it is also a poison that leads people into depression, filing bankruptcy, and being unable to live a life of freedom. A sad reality but exists.

If you’re not yet in a debt trap and wants to avoid it in the future or if you’ve come and want to avoid seeing it in big, you came to the right place.

In this article, you’re going to learn how to avoid debt and also not get drowned in existing debt.

Here is the exact breakdown of what you’re going to learn.

Why do people get into debt? 

There are several reasons which lead them to get stuck in debt. 

Some most common ones include the following:

  • For buying houses and apartments they buy mortgage loans or get private loans on monthly installments.
  • Their income is not enough to meet the necessary household expenses so they take consumer loans.
  • Buying expensive and luxury cars they take car loans or buy a car on lease.
  • For ease and flexibility, they have one or more credit cards that they use for shopping.
  • Taking loans for running a new business.
  • Student loans for getting an education from college or university.

The above reasons are most often back support for a person’s debt. And in all of them, people usually can’t buy with their assets and so they go for taking loans and other kinds of debt to satisfy those desires.

Why should you avoid debt?

Avoiding debt is more important than taking it for the fulfillment of your needs. 

Let’s take a look at the drawbacks of debt which helps you understand this question.

  • It eats up your monthly income information of payments or installments of mortgage, student loan, credit card, car payments, and personal loan payments.
  • You get stuck financially and can’t perfectly manage your finances. So you take more and more debt to satisfy your needs. As a result, you continuously get stuck into more and more debt.
  • You can’t avail a life of financial freedom. What you earn gets wiped out into expenses and debt.
  • Debt creates serious health abnormalities like tension, anxiety, and depression. Which is totally a result of not having enough money to meet your needs.
  • It prevents you from investing in other important opportunities like retirement funds, insurance, and emergency funds for meeting unexpected bad events.

I hope you understand the ugly truth behind debt. This is why I and the world’s top financial experts discourage taking debt.

Related Article: How To Pay Off Debt Fast (11 Bullet Proof Tips )

How to avoid debt? 

Now comes the important part that you know can help you avoid debt or minimize the existing one. 

So let’s dive right in.

Some general tips

Let’s discuss some general tips on how to avoid debt.

1. Don’t fall on impulse purchases

Impulse purchases are the ones you don’t need the thing but you purchase it. It can be a t-shirt or shoes of your favorite brand or clothes your favorite Hollywood actor wears.

You normally use your credit or debit card to pay the money. If you use a credit card it will compile more debt on you. On the other hand, using a debit card or paying in cash is also a waste of money that you can use to pay existing debt payments.

To avoid these kinds of purchases. Prepare a list of compulsory items you need before going shopping and stick to it. Another way is to think about whether you really need it or not. This will help you change your mood.

Related Article: 59 Ways on How to Save Money Even If You Find it Difficult

2. Spend what you can afford

Staying inside the circle of what you can afford is a good habit. It not only helps you avoid emotional buying but also from swiping your credit card for expensive items.

Keep a budget and analyze your necessary expenses like food, utility bills, loan payments, and savings. Also, see which ones are extra that you don’t have any need for, so cut them out.

This way you can easily switch to satisfying your needs and avoiding luxurious spending.

Related Article: How to Create a Personal Budget [6 Easy Steps] PLUS Template

3. Maintain an emergency fund

These funds are used to cover your monetary needs in any emergency situation. It can be illness, injury, or any other like COVID-19. 

Satisfying these kinds of bad events becomes easy with emergency funds.

So set aside some amount of your salary ( at least six months) in your saving account or in any investment form like bonds or government securities. In case your income flushes out in debt payments you still have money to survive. 

It is also helpful for paying fees or down payments on your debt.

Related Article: 23 Money-Saving Challenge Ideas To Build A Big Saving Fund

4. Do regular calculations

Regularly calculating your debt amount and installments is helpful in keeping your records on track. You know how much you paid and how much debt is left. 

It also helps you to keep an eye on which debts you need to pay greater interest on if you’ve multiple loans. You can use this strategy to pay higher-interest debt first to save money. 

You can also prevent debt fraud and become financially smart.

5. Increase your income

It is the most amazing trick. 

If your existing income is not enough then finding ways to increase it is key. You not only easily pay expenses but also get more money to save for the future.

There are several ways you can do it. I’m listing down some easy ones here:

  • Start a part-time job ( like tuition if you’re a teacher)
  • Do a side business
  • Take help of freelancing and sell your skill
  • Make courses on what you can teach others and sell them online
  • Make a YouTube channel or do blogging part-time
  • If you’re a finance lover then trade on forex and the stock market

And there are endless ways you can try. It is up to you which option you like the most.

Related Articles:

What is Six Figure Salary? 25 Jobs That Pay You Six Figure

How To Make Money Without A Job (55 Lucrative Ways)

62 Best Jobs For Stay-At-Home Moms (Online And Offline)

How to avoid credit card debt?

1. Check your affordability

If you want to buy something with a credit card then analyze whether you can afford that thing or not. And how you can do that is to watch your pocket. 

If you can buy the same item with your cash or debit card then good. You can afford that with a credit card as well.

But if you can’t then avoid that purchase. 

Having a credit card doesn’t mean you can buy anything. Ultimately you’re buying using bank money which you need to pay later. 

What mistakes do most people make? 

They buy like crazy and don’t compare that with how much they really earn ( income). As a result, the credit card bills compile which they can’t pay on time, and bear interest expense and late payment charges. 

Therefore, use this trick next time and prevent credit card bills from compiling.

Another tip for you is to not get a credit card if your income is not enough. In case you’ve left money after covering the necessary expenses, then it means you’re financially healthy and can afford to have a credit card.

2. Avoid multiple credit cards

Multiple credit cards equal a greater amount of debt. 

If you have more than one then cancel out the extra ones. Why? Because you’ve more credit to spend from different banks which can compile multiple debts with varying interest amounts and fees. It also gives you an opportunity to spend more money which can get you into trouble. 

What do you do?

Have a single credit card that helps you stay within the threshold of credit you can spend. 

This way you can easily pay back the amount you spend and incur less interest and late fee charges if you can’t pay on time. 

Related Article: How to Pay Off Credit Card Debt Fast (17 Quick Tips)

3. Pay the bills on time

This is simple. Whatever you purchased using a credit card, return it within the due date. This habit prevents you from penalizing and compiling interest on loans. 

But these tips will only help if your credit card spendings are affordable.

4. Don’t share your credit card

I recommend you don’t share a credit card with anyone like a relative, friend, or colleague.


Because ultimately you’re responsible for paying the bill that compiles from their usage. And it is likely that they refuse to pay you what they spent. 

Another drawback is that he forgets your credit card anywhere which results in thieves stealing your balances until you block them. And you need to go through blocking it and other legal headaches.

So use it yourself to have knowledge and control over how much credit you spent.

5. Avoid cash withdrawals

If you need cash on hand then avoid taking cash advances from your credit card. This will cost you extra charges, fees, and interest.  Along with that, the terms for late payment are also not available on cash withdrawals and you may incur a penalty.

Instead, take a short-term loan from any of your colleagues or friends. The best option is to directly withdraw from your debit card. 

How to avoid mortgage debt?

1. Look for a rented house

Buying a new house is expensive. If you can’t afford that but still want to satisfy the feeling of living in a house, then take the rented one. 

Rented houses are normally a better option as compared to ones your own. And most rents are in your income range so easily affordable. 

And in case you do any maintenance of that house you can cut out those expenses from the owner’s rent. 

Rent will go out of your income which means no mortgage debt and no interest. 

2. Pay with your own money

If you’ve enough cash and bank balances that you can easily afford the house price, it is the best option to pay with cash. 

That way you pay the original price, not the extra one in case of a mortgage. Like interest, fees, late charges, and down payments. 

But it is usually affordable to those who have large income sources and usually come from their own businesses. A person doing a job doesn’t have that much cash on hand. But if you’ve then stocked in private loans and mortgages is a poor financial decision.

3. Go for an apartment

Apartments are a lot more affordable as compared to buying a house. 

 Why is it a good option?

Most apartments are amazing with a cache-eye view. They give a feeling of personal home. 

You also don’t need to pay extra costs like maintenance. You also get amenities like gym and swimming pools so you can enjoy yourself without spending extra money.

If you don’t have enough money you can take an affordable amount of loan, and you can pay it back easily.

How to avoid debt in college?

Here are some simple tips to avoid debt in college:

1. Do a side job or business

Doing part-time work is the best way to make money for a college education. This will help you cover hostel rent, personal expenses, and semester installments.

But how do you do that?

  • Do a part-time job with a good hourly rate at a local store or business.
  • Learn a skill and sell it as a service online.
  • Do your own small business offline or online.
  • If you search Google you will find tons of different ideas.

2. Save before going to college

Star saving from school level for college and university education. If you are dependent on your parents then ask them to set aside some amount each month to cure your college needs.

Saving at the right time will get you a big some at the time you take admission to the college.

You also love: How Student Loan Interest Is Calculated? 3 Easy Steps

3. Get scholarships

This one tip helped me get 25% off my university semester fee. And it totally depends on your grades. 

If you’re a hard-working student with excellent numbers and grades in school and can maintain them in college then amazing. You can not only get a full scholarship if not then at least more than 50% off.

How do get them?

Simply search for universities and colleges that are offering scholarships. See where you have the most chance to get in by analyzing their benchmarks and applying to plenty of them.

In case you’re from a poor family or orphan some universities give full scholarships.

You’ve learned about how to avoid debt including general tips, credit card tips, mortgage tips, and if you’re a student.

Let’s answer some important questions in the next section.

For more information: 9 Best Websites and Search Engines for Finding Scholarships

Some important questions 

How to avoid debt collection? 

To avoid debt collection I recommend you the following tips:

Pay the bills on time as they arrive. There is nothing worse than paying a late fee after the due date.

Make an agreement with your collector to pay in installments that you can easily afford.

For more information on how to avoid debt collections read this When Does An Account Go To Collections, And How To Avoid It

What are good and bad debts? 

Good debt refers to one which builds up your wealth and enhances your financial performance. In simple words that help you get out of your current financial problems and secure a good financial future for you. 

The best example of good debt is business debt like bonds and bank loans because they are helping you grow the business and improve the bottom line. Likewise, the loan for education is also an example of good debt.

Bad debt refers to any kind of loan you take that doesn’t contribute to your financial health. It usually builds up more and more expense or liability. The best example is credit card debt and other consumer loans for just spending.  

You also love: What Is a Debt Snowball Method? How Does It Really Work?

What is the downside of debt consolidation?

Debt consolidation refers to paying off your existing debt by taking a new loan with a lower interest rate. With its low-interest advantage, it also has some really bad downsides. 

The most important you need to stay cautious of are:

  • If your credit score is low you may be subject to a higher interest rate.
  • Can fall you into the illusion of spending more when you see your existing debt paid.
  • Extra costs are involved like annual fees and balance transfers.

Related post: How Does Debt Consolidation Work? Is It a Good Idea?

Can the government write off my debt?

Yes but if there is any government debt scheme. Usually, the companies advertise fraudulent debt write-off schemes with the name of the government, so avoid them.

How can I pay debt fast?

It is possible to pay your debt fast if you follow good financial habits. 

Here are the tips which really help you:

  • Cut out credit card purchases to avoid building extra debt
  • Cancel out all the additional credit cards ( more than one)
  • Pay in cash or with a debit card
  • Stop useless and non-essential purchasing
  • Stay in your affordability and don’t overspend
  • Block unwanted gifts, impulse buying, and parties
  • Use your extra money like allowances and bonuses to pay the debt
  • Try to pay the high-interest debt first
  • Use debt consolidation 

If you follow these tips you can pay your debt very fast and easy way.

Related Article: 40 Personal Finance Tips To Effectively Manage Your Money

What is considered debt free?

Debt-free means when you don’t have any type of loan and its payments. In case you lose your job or business there is no obligation or liability to be paid. 

It is a very different life when you’re debt-free. Because there is no tension between monthly payments and mortgages. You have an opportunity to save and invest more money.

How much credit card debt is OK?

This advice varies from expert to expert. Here is some common advice:

  • It must not exceed more than 10% of your monthly disposable income for a given month.
  • Some say it doesn’t exceed 36% of your income each month.

But in my recommendation spend as minimal as possible with your credit card. Because due to a certain bad even if you’re not able to pay it back then it will result in extra cost and affect your credit score.

Is it possible to live without debt?

Yes absolutely. If you’re earning enough income or have enough money for your college expenses, as a student then excellent you don’t need loans. 

And if you’re low income then try to implement ways to earn more.

Some people with enough income still have debt because they use credit cards. If you’re the one then cancel your credit card and start using a debit card to avoid bearing debt.

You also love: How to Use Debt Avalanche Method to Quickly Pay Your Debt?


If you want to live a life of financial freedom then it is important to learn how to avoid debt.

For avoiding debt or minimizing the current one is important to first learn about the ways and increase your financial knowledge.

Let’s revise what tips you learned:

Some general tips

  • Don’t fall on impulse purchases
  • Spend what you can afford
  • Maintain an emergency fund
  • Do regular calculations
  • Increase your income
  • Check your affordability
  • Avoid multiple credit cards
  • Pay the bills on time
  • Avoid cash withdrawals

How to avoid mortgage debt?

  • Look for a rented house
  • Pay with your own money
  • Go for apartment

How to avoid debt in college?

  • Do a side job or business
  • Save before going to college
  • Get scholarships

If you apply these tips I’m sure you can easily minimize or avoid debt for as long as you can.

If I missed out on any tips in this article you can remind me in the comments.

Other Helpful Articles:

How to Stop Wasting Money Using 12 Simple Financial Tricks 

11 Downloadable Printable Monthly Budget Template (Excel + Pdf)

Cheap Eats Near Me: 29 Ways to Save Money Dining Out

Ahmad Ali