5 Ways to Stay Out of Debt in 2013

Debt Free Living in 2013

Financial times are tough in 2013, and they don’t seem to be getting drastically better for the average consumer.

The unfortunate thing is that most of us are in fact “average consumers” — we have limited income and rising expenses, and we’re faced with a “new normal” of rising costs and stagnant earning potential.

People who live in these scenarios usually have debt playing into their situation in one of two ways:

• First: They overspent when times were good, and now that things are a bit tight, the debt and interest have piled on to their monthly expenses and have become almost impossible to pay off.
• Second: As a result of tough economic times, people have resorted to going into debt to pay bills or even to maintain a certain level of luxury in their life, and have managed to ring up a large amount of debt in that fashion.

Regardless of where you land on that spectrum, the goal is to get and stay out of debt.

Whether you’ve already gone down this road, or are anticipating having to use debt as a tool to deal with your situation, we need to talk about a few ways you can avoid going into debt entirely.

Oddly enough, the answers are more or less the same for both scenarios. These points can be applied whether you’re doing great and wanting to avoid debt, or barely scraping by and wanting to avoid debt.

The thing to keep in mind is that debt can help anyone in the short-term, but in the long-term it can have disastrous consequences.

Here are a few ways to help your wallet’s cause:

Limit your expenses

The battle isn’t really won by making more money; it’s won by saving more of what you already make.

Don’t always think of saving money as putting a quarter in your piggy bank or socking money away in a savings account somewhere. Saving money is basically just limiting your expenses. Here’s a good example:

When you sign up for a gym membership, you’ve got two options:

• Basic access to weight room and pool: $20 per month
• Basic access to weight room and pool, plus tanning and spa: $35 per month

It’s no accident that the price difference between the two is less than the cost of the cheaper plan. Why? Because they want you to feel like the $35 plan has more value so that you’ll buy it, even if you don’t really need to tan or go to the spa.

If you really want the gym membership, it’s fine to buy one, but go with the cheaper plan and avoid luxuries that you don’t need, because the $20 plan saves you $15 a month, which is a moment where you’re reducing your expenses.

Downgrading your cellphone plan, getting cheaper Internet service, or canceling weekly trips to the movie theater are all ways you can limit your expenses. When you’re dealing with debt, that’s one of the most powerful things you can do to avoid debt entirely.

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