Some of the links in this post may be affiliate links. If you click a link and purchase an item I receive a small commission at no extra cost to you. All opinions are my opinion. Read the full disclosure here.

Avoiding debt is relatively simple, however, if it were that easy everyone would be debt free.

Although consumer debt has improved for 2020, the average household’s credit card balance was over $7,900 in Q2 (USA).

As for auto loans, the average monthly payment for new vehicles in the US is $550.

Debt is very normal, but that does not mean you need to fit the norm.

Here are a few tips to avoid debt:

Have an emergency fund

At this point, everyone’s emergency fund should be very well cushioned.

Emergencies can happen at any time and an emergency fund will help prevent you from falling behind on your bills

If you don’t have the cash to cover that emergency, you will have to charge to your credit card or take out a personal loan.

Overall, having a well-funded emergency fund is very comforting.

Create sinking funds

Sinking funds are savings for specific expenses in your life, such as gifts, medical co-pays, holidays, clothes, etc.

Typically, people go into debt for the same reasons every year. For example, maybe you go into debt every December to buy gifts or due to vacation every Summer.

Instead, you can save for those expenses every month and you’ll be in a much better financial situation.

I keep my sinking funds in a high-yield savings account and save for them automatically on the first of every month.

If you cannot afford something in cash, you shouldn’t buy it

Most people see credit cards as an opportunity to buy something now and pay for it little by little. Obviously, this causes revolving credit card debt.

If you did have the money for something, you could pay for it straight or use your credit card for points and then pay off the purchase right away.

It’s also very rewarding to save for something and purchase it when you’re able to.

Have a budget and track your spending

Create a budget that you actually will stick to and track your spending every month.

Most people don’t know where their money goes, how much debt they have, or where their finances stand.

If you start to be aware of these things and plan month-to-month, you’ll see a huge shift in your financial situation.

Your budget is going to help you save in areas you want to save, build up your emergency fund, and control your spending in your problem areas.

When you track your spending you become more aware of where your money is going and see what you need to work on.

Know and understand your weaknesses

Whether your weakness is Target, Wal-Mart, shoes, or electronics, then it’s best to avoid going to those places or being around those things.

You’re just asking for yourself to spend the money if you lack the discipline.

Of course developing discipline and control is important, but many people don’t have the discipline to walk into a store they love and walk out empty handed.

If you avoid your weaknesses, you can prevent unnecessary spending.

Choose your partner wisely

This may not apply to everyone, but most people will have a partner/partners in their lifetime.

Financial trouble is hard to avoid when your partner is in a bad financial situation or makes poor financial decisions.

Things get worse when two people don’t discuss money or work together.

Financial stress in a relationship is known to cause tension and contribute to divorce.

Don’t keep up with the Joneses

If you see your peers upgrading their car, going on lavish vacations, or moving into a bigger home, there is no need to feel the pressure to do the same.

Keep in mind that ‘The Joneses’ probably have lots of debt to go along with those upgrades.

Live below your means

This goes back to budgeting and being aware of where your money is going.

Living “within” your means can still mean living paycheck to paycheck. This is why I think it’s important to live below your means.

That way you can pay off more debt and save.

Pay off your debts

If you already have debt, you’re more likely to go into further debt.

If you have multiple minimum payments each month it can be hard to get ahead.

Create a plan to get out of debt and get started on it.

Continue to educate yourself in finances

The more your know when it comes to finances, the better off you will be.

When you’re educated and learn from other people’s mistakes, you can prevent yourself from getting into a financial mess.

You’ll see that buying brand new cars and spending your hard earned money on clothes isn’t the wisest thing to do.

So continue to educate yourself on debt, saving, investing, etc. by reading books, watching videos, and reading articles.