How to avoid debt forever

Falling into a consumer debt trap is something that happens to most of us at least once in our lives. And when it happens, we swear it will never happen again. Working to pay off that debt is hard work – and all that extra interest we have to pay can feel like an unfair punishment.

But too often we only learn these lessons the hard way – and it’s so easy and convenient to pay for what we want when we want it by going into a little bit of debt.

That’s the thing with debt for everyday expenses: It accumulates over time. It gets bigger and harder to pay off. Meanwhile, spending money we don’t actually have gets easier – pulling out the credit card or clicking ‘Buy Now, Pay Later’ becomes a habit and can feel like a solution to short-term cash flow problems.

But here’s the truth: you’re not powerless. Staying out of consumer debt isn’t about how much money you make. It’s about mindset – choosing long-term peace over short-term pleasure.

Here’s a plan to help you become debt-free – for good.

Ditch the temptations

Should you keep chocolate in the house when you’re dieting? No.

In the same way, you need to rid your life (and your phone) of debt temptations.

Cut up your credit cards or store them somewhere inaccessible (like the freezer – seriously!), close those Buy Now Pay Later accounts, and delete saved payment methods from shopping apps and sites.

The goal here is to remove frictionless ways to spend – because the less available credit you have at your fingertips, the less likely you are to relapse into debt without thinking.

Change your thinking

Start getting into the habit of spending money intentionally, instead of impulsively or as a “reward”.

Ask yourself questions like:

“Do I need this – or want this?”
“Can I afford it now – or do I need to save for it?”
“Does it support the life I’m building?”
“Will I regret spending this money in the future?”

Plan to get out of debt

Make a list of all your debts. All of them – credit cards, student loans, car loans, personal loans, even money you owe friends or family.

This might feel overwhelming, but it’s the first step in creating a plan to pay them down.

While the ‘snowball method’ (paying off the smallest debts first) can feel easier, the ‘avalanche method’ (paying off debts with the highest interest first) will save you more money over time.

For example, the average credit card debt in Australia is around $3,500, according to Canstar Research. With interest rates currently at around 17.7 per cent, that’s $620 a year you could pocket just by paying it off. The trick is to always pay more off your credit card than the ‘minimum’ every month. That’s the hook that lenders use to keep you paying interest.

Once your credit card is paid off in full, look at which loan is charging you the next highest interest rate, and then start working on paying this down.

Ask for help

If you’re in financial trouble, please don’t suffer in silence. Help is out there.

Talk to your bank or lender about hardship programs, payment plans and payment extensions. Credit card companies and financial institutions will be much more lenient if they know you’re trying to tackle the problem and can assist you to get on track.

Also seek professional advice on the best way forwards for you. I always recommend the National Debt Hotline. It is free to call on 1800 007 007 and you’ll speak with a trained financial counsellor who will give good guidance.

Build a buffer

Without a small emergency fund, you’re always one unexpected expense away from falling back into debt.

To squirrel away some savings, start by just saving what you can and then keep adding to it.

This isn’t about wealth-building yet – it’s about giving you some financial breathing room and a cushion to fall on when life ‘happens’ – so you don’t need to borrow money.

Spring clean digitally

In today’s automated world, there’s a good chance you’re spending money you forgot about.

Go through your apps and cancel auto-renewing subscriptions you don’t use or need. Likewise, check that none of your policies auto-renew – especially as you can often get a better deal when they don’t.

Unsubscribe from marketing emails from shops where you know you’re prone to impulse buying.

Basically clear the digital spiderwebs attached to your money.

Invest in financial literacy

I know I talk about this a lot, but financial literacy really is the foundation of good money management.

The more you understand how money works, the better decisions you’ll make.

To improve yours, read books by trusted financial educators, sign up to my newsletter (and others) and listen to money podcasts.

Learn how budgeting works, how interest compounds – in both good and bad ways. Learn how to spend smarter and make your money grow.

Find a money sponsor

Accountability is powerful. Tell your friends and family you’re on a “never-again debt reboot” and ask them to help you stay on track.

Also ask someone you respect financially to be your money mentor. Set regular check-ins with them to review your spending and budgeting, talk through challenges, and stay focused on your goals.