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14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2022

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

In today’s age, consumers have the easiest access to credit through credit cards. If used responsibly, unsecured and secured credit cards allow you to buy now and pay later. Also, it builds your credit history to qualify for loan terms in the future. 

However, in an instance where you completely skip the thought of what you can really afford and what you can’t, you may suffer from a debt trap situation. And it’s one of those things that nobody wants, right?

Too much debt results in:

  • If you borrow too much money, monthly repayments eat up your future financial goals like investments, holidays, travel, etc.
  • It leads to a weak credit score because of too much credit utilization.
  • Interest accumulates on the repaid amount. And high interest can be very damaging.
  • The pressure to get out of debt can lead to stress, migraines, and other health problems.
  • Mortgage loan application approval gets tougher if other debt accumulations are higher.

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

A debt-free or less-debt lifestyle isn’t impossible; it just requires the production of strategy for spending limits and priorities and sticking to that strategy.

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips

Photo by Alancleaver via Pixabay

Following are some practical strategies to avoid debt in your life:

  1. Pay Bills Timely 
  2. Track Expenses 
  3. What debts have you already taken? 
  4. Emergency Fund 
  5. Wants vs. Needs 
  6. Loan Payments 
  7. Budgeting 
  8. Pay with Cash 
  9. Number of Credit Cards 
  10. Clear Card Balances Wholly 
  11. Record of Card Purchases 
  12. Utilize Credit Cards Wisely 
  13. Coupons | Discounts 
  14. Save if Your Salary Increases 

Pay Bills on time.

In order to maintain your financial life, it’s very crucial for you to keep track of what bills you owe, their due date, and pay them off in time and in full.

If you choose to ignore your bills, they not only keep on accumulating, but you may also be charged a late fee. Moreover, this attitude weakens your credit score and credit rating.

Below are some ways to help you pay on time:

  • Bill-Paying Reminders

Apps like Mobills App, Bills Monitor App, and Mint App allow you to set reminders so that you don’t forget to clear bills in time.

  • Auto Pay

You can pay some recurring bills, e.g. utility bills, through an automated bill payment facility. You can sign up for this facility via your bank accounts.

Track Expenses

Consider making a sheet to have a clearer picture of your finances:

  • Investment Accounts
  • Bank Accounts
  • Unsecured and Secured Credit Cards
  • Loans

If you own more than one credit card or bank account, handling their information via expense sheets minimizes negligence. Moreover, you abstain from making any unplanned expenses.

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

One goal of having healthy personal finances is to be debt-free, especially if the debt becomes unpayable over time.

If you want to pay your debts, but what you earn is not enough, there are some tips that you can apply to improve your financial statements and meet your commitments.


Create your budget so you know how much you are spending each month and how much you have left at the end. If your balance is very fair or you have almost nothing left, then you have to reorganize your expenses.

Analyze which ones you can temporarily eliminate and which ones to save on, for example, change outings with friends for a meeting at home, cancel subscriptions, or reduce telephone and television plans.

Remember that everything you can save adds up, no matter how small it may seem, and that this measure is temporary, as soon as you finish paying your debts and you have liquidity again.


If you are already saving on expenses and have a little more solvency each month, make a plan about how much you can pay and how long it takes to have certain debts paid off.

The plan must be broken down by months and amounts, so you will know more or less how long it will take you to pay off a loan, and you can use that money for something else or to pay off another debt.

When you note down your expenses, it gives you a monthly overview of your spending habits. This sheet then gives you a good reason to judge these habits and cut them down wherever possible. 

The money thus saved may prevent you from overspending on your card or paying your debts in other cases. PocketGuard, Good Budget, and EveryDollar are some good app options to categorize and track your expenditures.

What debts have you already taken?

To avoid getting stuck in the debt cycle, consider making a list of all the taken loans, their due dates, and interest rates. Experts advise paying off loans with higher interest rates first!

One can also look up his/ her credit report to ensure he/ she has included all the taken loans in the sheet. 

DTI stands for Debt to Income Ratio. This personal finance measure shows a comparison between your monthly income and the money you have lent.

Emergency Fund

These rainy day savings help you face difficult and uninvited events, e.g. injury, job loss, medical emergency, car accident, etc.

It’s all about management control, right? When you receive a monthly salary, it’s wise to save some in emergency funds in addition to household expenses and loan repayments.

These funds are a big relief in undesirable occurrences.

Wants vs. Needs

There is no fixed differentiation between wants and needs. It usually depends on your lifestyle and earnings. However, it is advised to determine your needs/ necessities and wants/ desires.

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

Limiting your desires like shopping and expensive travel can prevent you from debts.

Some people can’t afford to buy a car so they go for car loans. This takes up a huge chunk of their future income and time to become stable again. In contrast, if they use public transport or quality used cars, they can be saved from this debt cycle.

Loan Payments

You should avoid late repayment of loans to sidestep:

  • Accumulating interest rates
  • Rotten credit score
  • Late repayment charges
  • Deactivation of cards


One must always keep an eye on:

  • What do you earn?
  • What do you spend?
  • What you can’t afford?

This overall picture advances you in so many ways. For instance, you can judge and avoid bad spending habits, pay off debts on time, be tax-season ready, and save money for emergencies. Furthermore, it improves your decision-making abilities.

Pay with Cash

Your credit cards may push you towards impulse spending with the charisma of the “buy now and pay later” phenomenon. You may forget that this luxury has a cost in terms of interest rates. 

  • 70% of Americans use a credit card.
banking tips

Photo by Mediamodifier via Pixabay

In contrast, paying with cash helps you stick to the budget and prevent you from overspending. If your debt accumulation is very high – consider leaving your unsecured and secured credit card at home while going out for purchases.

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

Number of Credit Cards

When you have more, you tend to spend more, right?

Owning too many cards may cause more spending and poor management of finances. Only own the number of cards you really need and abstain from applying for more for healthy finance life and even healthier credit ratings!

Clear Card Balances Wholly

Employing credit cards builds your credit history and it’s convenient to use (in comparison to cash) e.g. while shopping online, for availing card discounts, and paying for Netflix bills, etc.

Build a habit of paying off these balances the same day or the next day instead of waiting for month-end. First, you will avail of credit card benefits. Second, you would know what you can afford in the next few days!

Record of Card Purchases: Keep a record of all credit card purchases

This record helps you determine what purchases are unnecessary and you can skip those to save some dollars.

Utilize Credit Cards Wisely

You must know what you can really afford. Some people confuse this and burn their credit cards irresponsibly. Experts advise you to avoid those card expenses for which you don’t have cash at the moment.

Coupons | Discounts

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

Coupons are one of the best ways to save money on some monthly expenses like groceries. If a discount is going on, consider stocking unperishable groceries for two or more months.

Whether it’s a TV or washing machine, compare prices before you make a hefty purchase.

  • $90,400 is the debt amount of an average American.

Photo by Skitterphoto via Pixabay

The money thus saved can pay off some of your debts.

Save if Your Salary Increases

In the event that there is a rise in your monthly income, manage your monthly expenses as per the previous budget and save this raised amount.

Maintaining savings can be challenging but doing so is such a peace of mind that you are able to afford any unexpected event or travel or your children’s studies.

It also prevents you from getting stuck in the monthly debt repayment cycle and maintaining a healthy financial lifestyle.

How to Pay off Debt Wisely?

A steady and smart strategy can help you get out of debt past. It might not be easy but sticking to some rules, maintaining a positive mindset, and a responsible attitude can make this journey easier.

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2023

Following are two strategies of accelerated liability repayments:

Debt Avalanche MethodDebt Snowball Method
In this method, money saved after clearing minimum payments on loans is utilized to pay off high-interest debts.In this method, money saved after clearing minimum payments on loans is utilized to pay off smaller debts.
This method saves borrowers from high-interest rates.This method settles debt fast but it is usually expensive than the avalanche method.

Tips to pay off debts wisely:

Face the Situation 

It may not be the liveliest thing to do, but you gotta do it right? You are in this debt hole, and you want to get out and sort your life.

Take out all the due receipts, bills, credit card/ loan statements. Determine your debt-to-income ratio. If the debt is much higher than your income, tackle the situation by selling an asset or filing bankruptcy.

Credit Rating and Credit Report 

Take your credit report from credit reporting agencies: Transunion, Equifax, and Experian. Some reports may charge you a fee. Look for any defects in the report because sometimes there may be glitches, and they can be sorted by requesting edits.

Also, this report would showcase your repayment behavior with lenders, and what has caused you a poor credit score.

Expensive Debts First 

Now that you are clearly familiar with what you owe, prioritize repayments. Would you pay off high-interest debts first or low-interest ones?

Though experts advise former, it’s completely up to you and how it suits you!

Additionally, carry one to no cards with you while purchasing and consider using cash only. This would prevent you from unnecessary spending.

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

  • Also, abstain from high-interest debts in the future.

Evade Credit Card Spending

In the scenario where you are swimming in debt, it’s better to avoid burning your credit cards for a while (even if you are getting discounts via these cards).

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips

Photo by Rupixen via Pixabay

This is because employing cards will further boost your credit utilization ratio thus destroying your credit score and ultimately the creditworthiness as a borrower.

Earn More 

Career transit may be rewarding and convenient for some than others. Others can opt for side hustles like freelancing to earn some extra cash.

Making more money not only helps you clear debts fast but is extremely beneficial for the comfort of your mind. It also diversifies your income sources which are always a win-win for anybody.

Debt Repayment App 

A debt repayment app organizes all outstanding debts and keeps a track of all loan payments you have made till now. 

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

These apps make debt management a lot stress-free than manual administration.

Terms Negotiation 

If you have borrowed from multiple financial institutions, first visit the creditor with whom you’ve had a better relationship.

You must carry your credit report and updated budget and try negotiating debts.

Change Habits 

All of this journey would bring you face-to-face with the spoilt money spending habits. It’s high time to promise yourself to re-assess these habits and develop smarter ones.

Credit Counsellor 

You may also hire a credit counselor for professional advice to deal with debt smartly.


What is a Debt Trap State?

In this situation, the borrower is not in a condition to repay the loan. One of the reasons is high-interest rates and this trap may lead to bankruptcies.

Why somebody faces a debt trap?

Following maybe some of the causes of a debt trap:

  • Expensive lifestyle
  • Low income
  • Low savings
  • Weak or no budgeting
  • High credit utilization

Why avoid debt?

Where some debts are rewarding, others can suffocate you with high-interest rates.

14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips 2024

Too many debts spoil your credit report and you may be denied future loan approvals requests.

What is good debt?

A good debt builds a good credit history and displays you as a responsible borrower.

Why rich borrow?

Though they don’t need to borrow, they borrow for investments and utilize it to make more money and be wealthier.

How can I clear my debt?

  • Pay bills on time
  • Keep track of expenses
  • Clear debts instead of accumulating them

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14 Strategies to Avoid Debt | Liability Limiting and Money Managing Tips

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