Four Simple Ways to Avoid Debt

Do you want to have something substantial to leave behind for your children and grandchildren? Do you want to go from living paycheck to paycheck to living within a comfort zone? Do you want to know the peace that comes from living without debt?

If you answered yes to any of the three questions above, chances are you answered yes to all of them.

Here are four simple ways to avoid a lifetime of consumer debt, steps that are simple to remember and certain to give you the peace that so few know:

1) Set up an emergency fund: Start with a true emergency fund of $1,000. This fund is simply for the things that come along in life that weren't planned for, like the washing machine, past its warranty, decides it's time is finished. This fund is for the unexpected car repairs that most people haven't worked into their monthly spending plan.

Face it. When you're least prepared for something bad to happen financially, that's usually when it happens. My wife and I awakened on Super Bowl Sunday, knowing we were expecting at least a dozen people to our home in a matter of hours. That's when we realized all our toilets were clogged and a plumber was in need.

Ever try to find a plumber on Super Bowl Sunday? It's not easy. When you do find one, he's not thrilled about working on the biggest sports day of the year. And the bill will prove it.

After the initial $1,000 is in place, the standard is to save until you have enough to cover 3-6 months of expenses.

2) Get rid of the credit cards. It's been well documented that consumers spend more when using plastic than when cash changes hands. There is little need for traditional credit cards at this stage; debit cards perform the same function and the money comes directly from your checking account. Even hotel rooms can be secured using a debit card.

But you only use the credit card in case of emergencies? That's why we have the emergency fund in place. Therefore, we don't need the credit cards anymore.

Ever wonder why credit card companies are so big on marketing to college students, especially those who aren't even employed? It's because they're an easy mark. Most need money and most don't see the consequences of overextending their credit. Until it's too late, that is. Then, those students are trying to begin their new careers and, not only are they likely saddled with student loans, but many have the extra burden of paying off credit card bills.

3) Write out a spending plan for each month. Do it at the beginning of each month so that your plan begins on the first day of the month. A lot of people don't realize how much money they're wasting simply because they have no plan of how to use it. When you have a written plan on where your money will be going, it has a way of replacing the guilt associated with spending.

Make sure your categories include money for savings, utilities, mortgage or rent, food, auto repairs, gas and oil for the car and giving to others. Even write in a line for money you intend to blow on snacks, magazines or a night out with friends. When you plan to blow a little money and it fits into the spending plan, it lets you know it's OK to treat yourself. Just plan to do it.

4) If you work in an office environment, try packing a lunch. Sure, it's a social gathering and you might not want to miss out on that. Take along your lunch and you can enjoy the company while enjoying an inexpensive lunch. Ten bucks for lunch on Monday might not sound so bad but eating out every day quickly turns into a budget-busting habit, a $200-a-month habit.

Reward yourself on Fridays with a lunch at your favorite restaurant.

Even using one of these tips will provide you with a big first step to avoiding the stress of living daily with debt. Try implementing just one step, then add another. Pretty soon, the feeling of financial freedom will provide you with enough motivation to add more steps on your own.