If you can get out of debt, it’s important to understand how you can stay out of debt in the future. Here are four ways to keep your finances in check.
1. Focus on saving: Remember the cost-cutting referenced earlier? If you can live without whatever you cut, do. When you make it a priority (and have the means) to save even a little bit every month, you’re less likely to end up in debt.
2. Create an emergency fund: Once you’re out of debt, don’t spend that extra money. Put it in an account you don’t see or think about. Maybe even set up automatic deposits. Then, when you have a big car repair, medical bill or home expense, you have options on how to pay for it.
3. Make sure your insurance plan meets your needs: Medical debt can be sudden and overwhelming. But choosing an expensive insurance plan can be draining in a different way. Explore your insurance options and be realistic about your needs. If you have children and recurring medical costs (like doctor visits and medication), your needs will be different from a single, healthy twentysomething.
4. Avoid temptation: Keep your credit cards to a minimum and make it a policy to wait before you buy. “If it’s something you want,” Conway says, “consider a rule to wait X days or weeks before you buy it, especially if you’ll buy it using credit.”
After all, debt may be a dreaded four-letter word. But it may not be one you have to use.
This article is not intended to serve as financial advice. All financial decisions, including investments, should be made carefully and potentially with the guidance of a professional financial advisor.