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With all the temptations credit poses combined with un-forseeable circumstances often makes debt a lifesaver. The problem, however, is drawing the line. Debt promotes spending more than you have and justifies living beyond your means, which can easily lead to falling into the debt trap and financially cripple you. Avoiding the debt trap, is more difficult than it seems.

Understand your loan
Before signing any document for credit, know all the conditions, interest rates and terms for repayment. Make sure you can afford the worst case scenario. Understand how much you’ll be paying every month and priorities to pay these fees.

Debt consolidation
A great way to manage your debt and reduce the amount you pay (while also improving your credit rating) is to consolidate your debt under one policy. Having one creditor, as opposed to many, is easier to manage and calculate interest fees. Before consolidating your debt however, make sure it benefits you. Understand the terms of the consolidation loan and its repayment.

Self control
If you can avoid debt, by all means do so. Rather save up for something that is not an immediate concern. Do not give into the temptation of buying or gratifying needless wants. Use interest rates to earn money by saving as opposed to throwing it away with debt.

Avoid pyramids
Get rich quick schemes should be avoided. They’re designed to seem lucrative and have innumerable anecdotes of success, but always require putting yourself into debt.

Insure Properly
Save money in other avenues such as insurance. Although necessary, insurance should not be a reason for putting yourself into debt. It helps to compare policies and insure accurately as opposed to over-insuring to be on the safe side.

Budget
The best and most obvious way to avoid debt is to manage your money wisely. Make sure you know how much money you need each month to cover your expenses and then stick to that plan.

Even if you have debt, priorities your repayments in your budget to avoid falling into the cycle of paying debt repayments and interest. Having debt is not the end of your financial stability if it’s managed properly.