Top 15 Tips on How to Avoid Getting into Debt

Nothing is more exasperating than constantly getting phone calls, emails or sms texts from your creditors reminding you yet again, that you’re behind on your debt repayments. While you’re well within your rights to get annoyed at this, you have to admit that your creditors are simply doing their job, and perhaps it’s about time you started taking responsibility for all that debt you raked up while splurging on unnecessary expenses.

It might seem too late or feel overwhelming, but by practicing a few key principles, it’s possible to not only get out of debt, but to avoid getting into it altogether. Here are a few tips on how you can avoid debt and keep your credit rating clean throughout your 20s and beyond.

  1. Make a budget and stick to it

Not knowing how much you’re spending out of your income can lead to some serious financial trouble down the line, whereas budgeting for your income beforehand is a great way to control spending.  Contrary to popular belief, budgeting is quite easy. The first step is to create a bird’s eye view of your monthly income and expenses, as this will give you an idea of how much you’re spending vis-à-vis the amount you’re earning.  Next, distinguish between your needs and your wants in light of your monthly income and sincerely ask yourself if the items you’re spending on are really necessary or just mindless spending. If it’s a necessity, then save up for it via a debit order, or purchase it through lay-bye. Vetting purchases beforehand is a great way to avoid buying for the sake of keeping up with the latest trends, a practice which could potentially put you in a financially vulnerable position.

Lastly, make a list of all your necessary expenses (including saving and investing), and make a commitment to take care of those first with every pay check you get. Once the basics are taken care of, and you have enough cash lying around to spend for the rest of the month, you can then spoil yourself with the remainder, if possible.

  1. Pay slightly more than your instalment amount each month

While it might seem like a tall order that requires too much discipline, it’s entirely possible to pay more than is required on your debt instalments. Think about it; the more you pay each time, the faster it’ll take you to completely free yourself from the debt. Plus, when you pay more than is required, you avoid getting into arrears, which usually prompts your creditors to pile on the pressure.  Setup a debit order with the added amount you plan on paying to your creditors, and you might just pull this one off every month until your debt is paid off!

  1. Pay with cash

It may not be the ‘cool’ or convenient thing to do, but keeping some cash on hand to pay for certain items like perishables and semi-durables, is a great way to avoid dipping into your credit card for frivolous spending. If you’re unable to pay cash, lay-bye is another great option to help avoid unnecessary debt. Granted, it’ll take a while before you can use whatever it is that you’re purchasing, but at least you’ll have peace of mind knowing that you’re not paying more than its original price, and you won’ have to fork out for extras like interest.

  1. Don’t Overspend

With all the cash in your bank account, payday probably feels like a mini-Christmas, where you get to spoil yourself for all the hard work you’ve put in throughout the month. But it’s also a time when most people overspend on superfluous expenses like shopping for items that they’ll never use, lavish beauty treatments and luxury outings with friends. If you have a limited budget then you should probably curb your spending by opting for more inexpensive ways to treat yourself. For example, instead of going on a weekend away, why not book yourself into a spa for a full day of pampering? Or go for lay-byes instead of paying with your credit card. Overspending often always leads to debt, and is best avoided by all means necessary.

  1. Avoid impulse buying

Buying things on impulse not only leads to feelings of guilt, but it can truly wreak havoc on your budget. Reinforcing the budget restrictions you’ve created for yourself to avoid impulse buying can be as simple as following practical and actionable steps, such as taking only the cash you’ll need when shopping. This prevents impulse purchases because you’ll be keeping to defined limits. Also make a list of all the items that you need to buy before you leave the house, and be sure to stick to it!

  1. Make price comparisons before purchasing

Whether you’re purchasing groceries or shopping for a new handbag, try shopping around and compare prices of the same item from different shops. Take into account not only the price but the quality and features that you’ll need from the item. You’ll be surprised at the savings that a little mindful shopping can yield.

  1. Avoid borrowing of all kinds

If you can’t afford it, leave it alone. Oftentimes we borrow money for seemingly ‘staple’ items that in hindsight turn out to be completely unnecessary. If you absolutely have to borrow some money, shop around for credit finance options and choose a lender with the lowest interest rates.

  1. Don’t allow your bank balance to go on overdraft

Keep an eye on your bank balance to ensure that there are always sufficient funds, as getting an overdraft can lead to extra charges. Also make provision for your bank charges to keep a positive balance on your bank account.

  1. Keep tabs on your credit card

Having a credit card is convenient, but it can easily tempt you into impulse buying, which is why it’s important to keep tabs on every purchase that you make with your credit card, and self-correct when necessary. Also avoid having more than one credit card, as this can get you into even more debt.

  1. If it sounds too good to be true, it is

Don’t fall for credit counselling scams or micro lending offers with seemingly ‘affordable’ rates and exorbitant up-front fees. Rather consult with a well-known agency instead, and confirm their credibility with the relevant sources. A reputable agency will offer a basket of services that include empowering you with the education to help you avoid making the same mistakes, debt review & counselling.

Non-profit credit counsellors are a great option in this regard, because you know they’re not just in it for the money, and are genuinely interested in helping you get-and stay-out of debt. Regardless, always have your lawyer read through and verify any agreement that comes with a debt consolidation scheme, and that’s after you’ve read it yourself! Lastly, contact your creditors each month to confirm that the agreed upon payments have indeed been made.

  1. Choose shorter payment terms

If you’re going to get into debt for any reason, choose shorter payment terms. This usually means less interest, plus you’ll pay off the debt faster. Once you’ve paid it off, close the account and stick to cash or lay-bye to avoid accumulating more debt.

  1. Don’t rush to purchase a home

Property ownership is not only a hot topic in modern South Africa, but also an overarching aspiration for thousands of young professionals entering the job market. The prospect of owning your own home is a tempting prospect for many, and can be a sign of ultimate success. However, rushing to purchase a property early on in life can be costly. Not only does it lead to having less disposable income, but when mixed with the financial strain of paying off your University education loans and making your car payments, paying off an expensive bond can be a stressful endeavour. To avoid the stress, try and put it off for the first few years of your career, and do your research when you do eventually decide to purchase a home. And remember, home ownership is a seriously major obligation.

  1. Don’t overspend on your wedding

Almost every woman dreams of it, the perfect wedding day flowing with expensive champagne, scrumptious delicacies, and designer decor with fragrant floral arrangements. Not to forget the sparkly wedding bands and that gorgeous wedding dress. Granted, all this sounds idyllic and magical, but the financial repercussions of modern-day weddings can be catastrophic. From the wedding cake and dress, to the venue hire, feeding the guests and purchasing the glittering wedding bands – all this doesn’t come cheap. And while some have generous parents to pick up the wedding tab, most millennials have to pay for their own nuptials, and this can lead to major debt problems. In fact, most couples end up borrowing exorbitant amounts to cover the expenses- not to mention the honeymoon!

This obviously places a lot of strain on the newlywed couple and research shows that post-nuptial debt is one of the leading causes of early divorce is young couples. To avoid diluting the memory of your big day with the stress that comes with post-nuptial debt, opt for a simple wedding ceremony with a few friends and family. For example, you can hold the reception at home or at the City Hall instead of renting out an expensive wine farm, go for a dj instead of a live band, and purchase a simple wedding gown instead of an overpriced designer frock. While it may not look anything like the weddings seen on your favourite ‘reality shows’, it’ll still have your personal touch. At the end of the day, the most important component of the wedding is to join two people and their families together, for a lifelong union of sharing life’s journey and all its ups and downs. So don’t fret the extras.

  1. Get medical insurance

Unfortunately, good quality health care in South Africa can cost you an arm and a leg, and for someone who doesn’t have health insurance, a major health event can really cripple you financially.

So try and find affordable health care insurance that’ll cover major health events like accidents and dreadful disease. It doesn’t have to cover minor medical expenses, but at least it’ll give you peace of mind knowing that you don’t have to take up a huge loan in the event of a major health scare. Certain insurance providers even provide useful extras like daily cash pay-outs to bridge the income gap during your hospital stay. Shop around for an option that meets your needs and your monthly budget, and stay financially prepared for those unexpected health scares.

  1. Save up

Our country doesn’t have much of a saving culture, and the downside of this fact is that it has become the norm for people to turn to debt as a means to pay for everyday expenses. Conversely, developing healthy saving habits allows your money to grow for longer, while providing you with extra cash that you can access to bridge the gap on those last few days before payday, and helps to avoid getting into debt over short-term loans.

Luckily, saving has been made simple with short-term, mid-term and long-term saving options that fit nicely with the fast-paced lifestyles of young millennials. You can use long-term saving products to make savvy investments like adding to your retirement portfolio, funding a start-up or making a property deposit. Mid-term saving on the other hand is well suited for things like making a down payment on a car or even that overseas trip that you’ve been dreaming about. Consult with a financial advisor at your bank to find out more about the investment vehicles that they have available and how they can benefit you and start saving today. You won’t be sorry.


It’s a hard realization to acknowledge that your hard-earned salary doesn’t go as far you expected it to, and failing to accept this fact is one of the reasons why people spend way beyond their means and end up getting into debt. While getting out of that debt is not easy, staying out of it can be as simple as implementing some of the actionable tools provided in this article. Sometimes all you need is a nudge in the right direction, but without action, even the best tips can go to waste. So act today and take the necessary lifestyle adjustments to stay out of debt.

From spending within your means to making a conscious effort to distinguish between needs and wants, diligently following a plan and making a commitment to yourself is the best and easiest way to get, and stay, out of debt. And by making wiser financial decisions and a conscious choice to stay out of debt, a brighter and struggle-free financial future is possible.