Here is a list of 10 things you should never do if you want to stay out of debt, or else you might get into debt and have a very hard time getting out of it.
1. Getting into credit card debt
A way that you can stay in debt for a very long time is by getting into debt with your credit card by overspending, skipping a payment by not paying your credit card balances each month and always paying the minimum on your credit card debt. Doing this will ensure that you will always be in debt and that your debt will spiral out of control.
To avoid getting into credit card debt, you should always avoid spending beyond your credit limit and you should always pay your balance in full each month. If you are in debt because you have exceeded your credit limit or missed a payment because of an emergency, you should pay all of your balance off as soon as you can, or even pay more than the minimum amount due so that you can get out of debt as soon as possible since the interests rates are extremely high. Credit cards are an absolute necessity in these modern times, and it's impossible to do without them. Use your credit cards wisely, don't overspend on them, and you will reap all the benefits they have to offer.
However, if you already carry a large balance that you are struggling to pay off and the card you carry it on has a high balance transfer APR, you should consider changing cards. The type of card you would need is one that offers a long 0% intro APR period on balance transfers. When you transfer your balance to a balance transfer card with a 0% intro APR period, make sure to pay off your balance in full during that intro period. If you use a balance transfer credit card to transfer your balance, you should use it exclusively to pay off your balance, not to make purchases.
2. Spending money on things you don't need
There are some people who waste their money on buying things that they like and want and many of them do so without knowing what they are spending their money on and without keeping track of it. If you do this, you will spend a lot of money unnecessarily. For example, if there is a sale at a store and you just feel like you must buy something just because it's at a discount, don't buy it if you absolutely don't need it.
You should only spend money on things you truly need and never for the sake of spending.
3. Not keeping track of how much you spend
If you want a sure way of getting into debt, just spend money without knowing how much you're spending and without keeping track of it and soon enough, you will find yourself in debt and without money.
To ensure that you do not waste more money than you can afford, you should draw up a budget and keep track of how much you spend and how much you can afford to spend.
One way that you can stay in debt forever and waste money is by gambling, whether at a casino or at a friend's house. If you gamble, you will most likely want to keep playing until you win and you will end up losing most of your money. Another way you can lose thousands of dollars over the years is by simply buying the lottery.
Never gamble more money than you are prepared to lose, since there is a much higher chance that you will lose.
5. Spending on luxury items
A very easy way to get into debt is by buying luxury items that you can't afford and that you must take out large loans to pay off the items, for example buying an expensive sports car or a house that is more expensive than you can afford to put a 20% down payment for.
6. Overspending on your wedding celebrations
You may want to show off to your friends and family how well you are doing economically, so you overspend on flower arrangements, catering, the bridal dress, venue rental, presents, honeymoon, hotel, etc.
Remember that these are only things that last for a day and after that for the rest of your life you will have to deal with all your debts, way after the euphoria has gone. To avoid being in debt, you should book in advance to get a better deal and you should always stick to your budget.
7. Not adapting to income changes
If you get laid off at your job or if your salary has been cut, and you keep on spending the same amount of money as before, you might not have enough to cover your expenses and you might have to dig into your savings or get into credit card debt.
To avoid getting into debt or dipping into your savings, you have to be willing to adapt to income changes and get used to not spending as much as before. For example, if you would eat out four times a week before, you might want consider eating out only once or twice a week. Or if you were used to taking a taxi to work everyday, you might want to take the bus or the subway since that could save you a lot of money.
8. Having children when you are not financially prepared
Babies and kids have a lot of needs and wants: you need food, clothes, toys and of course a good education that will help them in the future. In short, bringing up a child into adulthood isn't cheap. If you're not financially stable, you may have to go into debt to give them the best things you can.
If you feel that you do not have the money it takes to have a child, you might want to consider waiting until you are more financially stable.
9. Borrowing from loan sharks
If the banks reject your request for a loan and taking a loan from a loan shark seems to be your only option, that will lead you down the path of debt.
Never borrow money from loan sharks since they will charge you much higher interest rates than a bank would, and if you do not pay them back, they might hurt you or your family.
10. Keeping up with the Joneses
Your neighbor has a yacht, so you want a yacht too. Your colleague has an iPad, so you want an iPad too. Having the same as your neighbor/friend/colleague is fine, but having it just because they have it and not being able to afford it isn't OK since you will get into debt for the sake of keeping up the image. Just because people have the latest things doesn't mean they didn't have to go into debt to get them. You might even be in a better financial shape than them.