Create a budget and follow it:
First, list your monthly income and expenses. If you find that you're spending more than you're earning, you have a situation that needs to be addressed immediately. To successfully stay out of debt you must look at your spending habits, be honest, as this will show you where your money is being used and force you to decide if you want to continue or if you want to change your spending methods.

Think through your purchasing decisions prior to acting:
The more costly something is, the more thought you should give it. Compare the price associated with the purchase of the item to the use or need you may derive from it. In addition, remember some facets of the criteria you'll use to make a decision will be emotional, not financial.

As an example, consider the purchase of a vehicle (for most people an automobile is the second most expensive item they will ever acquire, their house being the most expensive). Many people consider owning a car to be fairly convenient, but they don't consider the costs associated with that ownership. Sound thinking about debt will tell you that you should purchase the cheapest car that'll meet your needs, and certainly not to give in to peer pressure or advertising that claims you should buy more of a vehicle than you require.

Be careful not to be nickel-and-dimed to death:
Sales pitches frequently say that the extra cost is only a couple of pennies per day, and although it's true, taking on a lot of those pennies-a-day items adds up. Also watch convenience items such as take out coffee; at more than a dollar a cup too many of these can quickly prove to be an expensive habit.

Get ahold of some savings and then pay yourself first and foremost:
Regularly set aside small amounts of money for the inevitable rainy day. The typical household in North America is only two paychecks away from a financial disaster. That is that a loss of income for a longer period of time than two pay cheques will result in people losing everything. Having some savings in easy to get cash will offer you great peace of mind.

Beware the appeal of easy credit:
It wasn't too long ago that credit was hard to obtain and people were required to make a case to a third party to get it. But now, individuals are bombarded with easy-to-get credit and alternative methods to borrow cash. While having access to credit in the form of such things as credit cards could be handy in cases of emergency, always remember they must be repaid and you may have incurred some additional costs for using them.

Make sure you know all the costs involved before accepting debt:
While credit cards are convenient, they're one of the most costly kinds of credit, due to the fact interest rates would be about 28 per cent for department store cards and 18 or 19 per cent for others like Visa and Mastercard. But, a good number of cards may be put to use with no costs to the user if they're paid off fully prior to the due date. After that, you have to pay interest on the overall balance.

People who need or want the security that comes with a credit card should use a bank card because they charge less on interest and have a greater amount of flexibility. If you aren't able to pay your card back in full, simply pay as much as you are able to and don't let yourself get caught in the trap of just paying the least due, resulting in the debt lasting much longer than need be.

Try to pay your bills in full and before their due date:
Completely paying bills prior to the due date will save money in late fees, appears great on your credit record and assists you in staying out of debt. If and when you aren't able to pay off all of your bills, be proactive and do 'damage control.' Attempt to pay back a few of the small bills fully and proceed to call the other agencies and inform them that because of your circumstances, you aren't able to pay them in full at this moment. Give those agencies what you can and tell them you'll pay in full ASAP.

Remember, never ignore those bills that you can't afford at the moment because the debt will end up with a collection agency, which will do everything it takes to get the money, flawing your credit rating for a long period of time.