While many people will give you advice on how to get out of debt once you are in it, the best bet is to never get to that point in the first place. Knowing how to stay out of debt is key to mastering your finances once and for all. This article will take you through the steps you need to know to avoid financial pitfalls.

Never co-sign a loan with anyone except your spouse. Even then, consider it carefully. When you co-sign a loan, you are providing money to someone and then promising you will help pay it back if they don’t. If they end up in financial trouble, you will be, too! Only take out a loan for yourself so that you are protected from problems in the future. If someone can’t take out a loan on their own, they probably can’t pay it back either.

If you have to use credit, do so, but don’t use it to buy things you don’t absolutely need. For example, if your refrigerator breaks down, you may have no other choice than to buy a new one on your credit card. Keep in mind that you will be paying interest on the amount you owe, so quickly check out your other options, such as a small loan from the bank, to locate the credit which offers you the lowest interest rate. If it is a bank loan, use that money to pay off your credit card so that you aren’t paying through the nose for the money you have borrowed.

Create a budget and adhere to it. Of course, some things pop up out of the blue, but your budget should be ready for it. Put aside some money for expenses you know come up from time to time, such as prescriptions or doctor’s bills. If you have that money put away, it will build up until you need it. That will save you from having to use your credit and build up even more debt. Consider all of the expenses you have in a year and then budget some money for each every month. Whether it is buying a new pair of glasses or replacing your brakes, you should be as comprehensive as possible.

Open some sort of savings account so that you can accrue some interest on the money you set aside. Make sure it is an account which allows you to withdraw from it, penalty free, whenever you wish. There are many high interest savings accounts available at banks which offer you this flexibility. Contact your current financial institution to find out what they have to offer. Be sure to ask about all the policies on any plan you choose to opt into, from hidden fees to regulations regarding income tax.

Debt isn’t easy to deal with once you have it, but it can be easy to avoid when you know what you’re up against. Use these tips to ensure that you don’t get into a debt downward spiral any time soon. You’ll be glad you took the time to do your research!