For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.


How to Avoid Debt – Full Guide with Top Tips

how to avoid debt uk

For free and impartial money advice and guidance, visit MoneyHelper, to help you make the most of your money.

To be debt free in today’s age seems like an impossible idea. From student loans to medical bills, debt has taken over everyone.

However, with the right knowledge, debt is certainly avoidable.

But how? 

Don’t worry, we’re here to help you so that you can learn how to avoid unnecessary debts.

Can Anyone Get into Debt?

We’ve all thought about how almost everyone’s deep into debt these days, but have you ever tried to think why it’s so?

If you borrow money from someone just once to get the tiniest job done, you’ll easily get trapped in the cycle again. It’s that easy.

So yes, anyone can get into debt.

But just as easily as you can fall into it, you can also avoid it with the right actions.

This is because no matter what you hear people say, debt is (mostly) the result of bad spending habits, simply working on those would save you from so much struggle.

Is Debt Always Avoidable?

Well, this is a strong claim to make, because today, even minimal survival has become hard.

Often, we’re led to situations where we see no way out for ourselves other than by taking loans. While it seems pretty inevitable then, we could have actually avoided being in that particular situation by looking into it years back!

As unrealistic as it sounds, it’s actually very practical to save cash for your future, there’s nothing better than this when it comes to avoiding debt.

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What Can Lead to Debt? – Common Mistakes You May be Making

Although sometimes inevitable, debt can also result from easily avoidable mistakes.

So without any further drag, let’s discuss some of the most common mistakes that lead to debt:

Lack of Proper Budgeting

A top reason for debts is the lack of proper budgeting. If you’re not tracking every small expense of yours, you’re most likely to suffer from such financial obligations in the future. 

The right way to get on track for all your expenses is by setting a monthly budget for yourself. Once you know your leftover amount after making necessary purchases, you can understand better whether you afford a particular luxury or not, before making impulse purchases.

Unmonitored Spending

This is again just an extension of proper budgeting. 

If you don’t spend your money in a measured manner, you’ll end up spending more than you can!

This is because if you list all your expenses, you would know exactly how much you save.

Knowing so will lead you to make rational choices as far as your wants are concerned.

So never practice unmonitored spending, this is the best debt advice we can give you.

Not Having an Emergency Fund

Now that you understand how improper budgeting can lead to debts, it’s also important to know that not all your extra amount should be spent on luxuries!

We understand that not all your ‘wants’ are exactly unnecessary, but you should avoid getting them at least until you have an adequate amount of money saved up.

This is because after taking out all that you require, you should also have a good amount of money saved up for any financial crisis that may break upon you in the future.

Debts are a result of unforeseen expenses, and they can be avoided by thinking long term and always having a good amount saved up with yourself.

Limitless Credit Cards

Here’s important debt advice: we cannot emphasise enough over how much you need to stay away from limitless cards to avoid debt!

They seem like an attractive idea if you don’t think too deep. What’s better than having a card that lets you pay anything anywhere without embarrassment of low balance, right?

This is the worst thing they do to you! This way, you never really see how much you’re overspending until you get the monthly bills.

And boom, you either have to give up all your savings, or go into a debt.

Needs vs Wants – Prioritise Your Spendings

Everyone spends on things that don’t really need monetary attention, it’s not just you, but to avoid that, you need to tell yourself that they’re not your necessities.

All of us have our own wants and needs, but we should know what’s what.

This way, you will be spending the right amount of money on your monthly expenses, and keeping good savings too.

This doesn’t mean you never have to spend a penny on things you want for yourself, it’s just that this way you’ll know if it fits your credit or not.

Not Keeping a Track of Credit Card Balances

Mismanaging credit cards is a great way to exhaust yourself financially. If you’re not tracking every payment you make, you’re most likely leading yourself to overspend.

Since credit cards are either limitless, or have way too high limits, you’re prone to spending more than you have the ability to.

So, the next time you’re employing the use of your credit card, remember to use it like you would use cash!

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How Not to Get into Debt

If debts are based on poor spending habits, that means that fixing such calculations could save you from future financial crises.

Let’s tell you how to avoid it.

Have a Clear Idea of What You can Afford at All Times

Again, this is based on how you distinguish your wants and needs.

Sometimes, we spend money on things that might be our need, but can be delayed. If you don’t have enough money for something that can wait, you should wait until you’re sure you can afford it. 

Maintain Savings or Emergency Funds

Of course emergencies are unforeseen, but you can’t not prepare for them beforehand.

You need to have a good amount of money saved up for circumstances that might or might not happen (hopefully not), but you better be safe than sorry.

After taking out all the money you need for your necessities, do not proceed to spend all the amount on a luxury!

The only safe way to use up money on something that isn’t an instant need is by having an amount of money which is more than your needed amount.

This way you’ll still be saving a solid amount. This should be your monthly pattern and not a one time thing.

Don’t Get too Many Credit Cards

We just cannot emphasise enough how bad credit cards can get for you. Fairly speaking, they’re the cause of card debt even for people who never thought they could be stuck in such a poor monetary condition. 

Avoid using them as much as you can, but if you can’t completely erase them from your life, do not get yourself more than one credit card. 

Even one credit card can be so financially draining due to a poor track of budgeting, imagine what a few others would do to you!

Try to Pay with Cash – Don’t Fall into the Habit of “Buy Now, Pay Later”

Credit cards harm you because they put you in a habit of buying now and paying later. This particular habit can lead you to overspend more than you can imagine.

But credit cards aren’t the only reason this can happen, you can also make certain cash deals that put you in the same situation, and honestly, it’s the worst thing you can do to yourself and your finances.

So under no circumstances should you get yourself something and decide that you’ll make the payment later.

Pay All Your Bills on Time (Avoid Extra Fees & Interests)

We’re all well aware of the fact that if you don’t get rid of all your bills in the right amount of time, they’ll put you through extensive amounts of late fees and interest rates.

Rationally speaking, it’s obviously better to keep a track on your budget and save up the amount of the bill beforehand instead of running out of adequate money, so that you can avoid paying a burdening interest rate.

Keep a Track of Your Credit History

This is again on the same pattern of falling fools to credit cards.

The best way to not overspend on things because of your credit card – or in cash – is to keep a track of all your expenses. 

To deal with credit card debt is another thing, your first priority should always be to avoid getting into debt in the first place. And that’s rightfully done by spending money in the right place, keeping track of all your credit, and generally fixing your spending habits. 

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Is it Possible to Get out of Debt?

Yes it is. 

But getting out of debt doesn’t just involve paying off the stated amount, rather changing your whole lifestyle.

Unless you really change all your spending habits, you won’t ever get out of debt, and instead bury yourself more in it.

Now that you think about it, is it better to keep a proper budget to save yourself from debt or to get yourself out of debt? We all know the answer.

If you’re struggling with paying off your debts, I highly suggest getting advice from an independent debt charity such as National Debtline or Payplan.

FAQs – All About Avoiding Debt & Managing Finances

Can I go to court if I get into debt?
The only thing that will take you to court is unpaid debt. You should return the amount concerned to your creditor on the decided date, if you can’t, he can take the claim to court.
How bad can a debt get?
Well, that depends on how much you owe someone (or how many people you owe money too, in some cases). Most experts believe that a DTI higher than 36% is pretty bad for you.
Can I get bankrupt because of a debt?
Bankruptcy is declared if you can’t repay your debts. So yes, your bank account can be declared bankrupt because of your unpaid debt.
Does debt affect my credit score?
Yes. If you don’t pay off your debts, your creditor has all the rights to drag you to a court. If you still can’t make a settlement, you will ultimately run bankrupt.
Can I use loans to get out of debt?
Well, that’s a tough question. But a straightforward answer would be no. If you’re paying off your debts by falling into deeper debts, you’re practically making your financial situation worse.

Wrapping it Up

Now that you’ve reached the end of our article, it’s fair to say that if you work on creating a proper budget for yourself, and spend your money wisely while making savings as well, you will be greatly saving yourself from debt.

With our debt advice, you can avoid debt greatly!


Are you struggling with debt?
Are you struggling with debt?
  • Affordable repayments
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring