Simple Steps to Avoid Slipping Back into Debt

Paying off your debt can be a very challenging battle, and when we can successfully pay it off, you might think that you will never have to deal with it again. Specific scenarios might force you to take on another debt, but as much as possible, you don't want to experience it again.

Many people suffer from getting entangled in the cycle of debt. After they have paid off their debt, they start a new one, which becomes part of their lifestyle. You can do certain things to stop yourself from slipping back into debt.

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Check out the simple steps to avoid slipping back into debt and live a debt-free life.

Limit Your Credit Card Usage

One of the most common ways to slip back into debt is by using your credit card. 

A credit card can help you build your credit score and get funds readily available, but people tend to play their hand and end up in a severe financial crisis. 

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Credit card users must always be responsible with their spending. If you've already dealt with credit card debt before, it is best that you limit your credit card usage. 

Use cash instead and go for credit cards with no annual fees or extra charges for simply using the card.

Create a Monthly Budget and Stick to It

Since you've already experienced how it feels like to live a life full of debt, you begin to learn how to budget your money every month. 

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Continue to list down your expenses and create a monthly budget around it. 

This time, stick to your monthly budget so you don't feel the need to borrow money and start another debt cycle. 

Avoid spending more than what you can afford with the money that you have. A simple budget can go a long way to help prevent you from slipping back into debt.

Understand Your Cash Flow

Your cash flow is all about what you earn and how you spend your money. With your income, this is the money that you receive from your salary and other transactions. 

Expenses are the money that you spend which can be broken down into two categories.  

These are essential expenses and discretionary expenses. Essential expenses are important expenses such as utility bills and groceries, while discretionary expenses are those that you don't typically need to live your life. 

By understanding your cash flow, you also understand your spending behavior and avoid racking up debt again.

Build Your Savings

One of the best ways to avoid slipping back into debt is to start building your savings. 

After paying off all of your debt, you need to save up money so you can use your savings to either pay for your discretionary expenses or use it to pay for your essential expenses during emergencies. 

You don't need to get a cash advance or a personal loan to afford a large purchase. For people who are living from paycheck to paycheck, make sure that you have enough savings for the next 6 months before you can start using your savings for other purposes.

Always Pay Your Bill in Full

Another reason why you are struggling with debt, or you slip back is you pay the minimum amount on your bill. 

Whether it is your credit card bill or any other transaction, paying the minimum amount means that you're also paying the interest rate. 

You can avoid this from happening by paying your bill in full whenever you have the chance. 

If you're struggling to pay the full amount, limit your expenses first and slowly pay it off until you can afford to pay it next time.

Find Another Source of Income

If you can't leave your lifestyle, you can always find another source of income to fund your current lifestyle. 

This allows you to enjoy your life without resorting to borrowing again and being buried in debt. 

A second or part-time job can always help you boost your income to sustain your lifestyle. 

You can even use the income that you earn from your second job to pay for your other bills.

Celebrate Your Progress

If you successfully pay off all of your debt, you should always celebrate your victory. 

A lot of people don't understand that becoming debt-free is a very difficult process that takes a lot of time and effort to achieve. 

If you have finally become debt-free, celebrate your success without having to borrow any money to do so. 

It is important to be optimistic about your progress. This will give you positive reinforcement that what you did was good for you, and you start to live the life that you deserve.

Always Have a Plan for Major Purchases

Holidays and sales are always the main culprits for falling back into debt. We tend to convince ourselves to buy the next best air fryer or a new iPhone.

We end up having to borrow money to get it. You should always have a plan for major purchases, especially during Thanksgiving weekend or during the Christmas holidays. 

Make a budget a few months before the holidays to properly save money to make the major purchases. 

This prevents you from using your credit card to buy them and avoid slipping back into debt.

Talk to a Financial Professional

Financial advisors are great at providing you with recommendations on what to do with your finances. 

After carefully considering your income and expenses, they can even draft a monthly budget for you. 

These professionals are highly experienced in handling your finances and avoiding getting back into debt. Make good use of their suggestions and follow them carefully.

Conclusion

It is always a struggle for people to avoid falling back into debt. You don't need to re-enter a life where you're constantly on the edge about whether you can pay for this monthly debt. Follow the simple steps to avoid slipping back into debt based on this article, and you should be good to go.

Last updated on January 10th, 2025 at 07:34 pm