My trying to share financial advice with me, my dad often mentions one of his friends — a self-made multi-millionaire. He usually brings up one moment he had with this friend, wherein he asked him a simple question over dinner: “How did you become so wealthy? What’s your secret?” His friend’s response was surprisingly simple and modest: “I’ve always stayed out of debt.”

Today, I want to share nine tips I’ve learned throughout my life about how I stay out of debt, build my credit score, and save money. Of course, everyone’s situation is different, but I hope some of these tips can be helpful for you, too.

1. If you can do it, pay premiums months or a year in advance.

When I moved back from Japan, I had to set up all kinds of things: car insurance, a cell phone, housing, utilities, even pet insurance. When combined together, they equalled a pretty hefty monthly bill. To cut down on my monthly expenses, I paid a few of my otherwise monthly premiums a year in advance. Even now, if I have a good month financially, I sometimes pay certain bills a couple months in advance. I do this because it means that more and more of my future income is mine to keep, which is especially useful if any emergencies occur, which would otherwise set me back financially.

2. Build your credit (but don’t abuse it).

Some people might tell you that in order to stay out of debt, you should stay away from credit cards. I think the opposite is true. When you sign up for almost anything involving money (car payments, mortgage, etc), your monthly bill will often be based on your credit score. The higher your score, the lower your payment. You can’t get a high score unless you actually use credit, so it’s important to regularly use credit and pay your bills on time. Credit cards with rewards are also great because you get free things, like gift cards or travel miles, just for making purchases you’d normally be making anyways. I have an Amazon credit card and receive around $50 in Amazon credit each month, just for making my regular purchases. Free money. Of course, you shouldn’t abuse your credit cards, which brings me to…

3. Can’t pay it off in 30 days? Don’t buy it.

This should be a no-brainer. If you don’t pay off your credit cards in full each month, your balance will increase based on your interest rate. This is how many people get trapped in debt. If you can’t pay it off in 30 days then you can’t afford it.

4. Track your spendings.

Do you really know what you spend your money on? After tracking my expenses, I was surprised to find that I spend more on my dog each month than I do on nights out with friends. I recently downloaded an app called Mint, which links to my bank accounts (even PayPal!) and tells me how much I earn and spend each month, as well as categorizes my expenses, so I can see where my money goes. It also allows me to create budgets and alerts me when I’m nearing my budget limit for certain items. I highly recommend it for gaining insight into your spending habits and finding ways to save.

5. Cut back.

I don’t have a TV because I know I don’t need one. I cancelled Netflix because I barely used it. When I’m cold, I usually just throw on a sweater instead of blasting my heater. Thinking of small ways to cut back on daily expenses will add up to larger savings over time.

6. Make a plan.

If you’re already in debt, don’t pretend like you’re not in debt. There have been times when my bank account came dangerously close to “oh shit” and I wanted to do anything but sort out my finances. But things cannot improve unless you create a plan. Go through your expenses and earnings and find ways to save and cut back. You’ll feel more empowered with a plan, too.

7. Consider insurance.

Usually the things you have the option of buying insurance for are the ones that could put you in the worst possible debt. Health problems? House problems? Pet problems? If you don’t have insurance, you might be SOL. One of my parents got into a really bad accident a few years ago without health insurance and ended up having to file bankruptcy because of all the associated bills. Insurance certainly can be expensive and you may not even use it, but when you need it, you really need it. It’s also nice to relieve yourself of the worry if something bad does happen.

8. Prioritize.

What’s most important to you? Being able to eat or being able to go shopping every weekend? Saving money or worrying about making rent for the second month in a row? Prioritizing can be a little boring, since you’ll end up spending so much on essentials — shelter and food — but watching your savings grow will be 100% worth it. I don’t always abide by this practice, but each month, I try to pay all of my bills before buying any other big ticket items. That way, once all my priorities are covered, I can feel good about the extra money I’m bringing in and spending.

9. Make more money.

I know, easier said than done. But it’s certainly not impossible and most likely, much of the reason you’re not making more money is because you don’t think you can. At least, that’s what I figured when I was a teacher earning less than $40k a year. “What else would I do? How else could I even earn more money?” As it turned out, I just needed to use the skills I already had to start a side business, which is now my full-time job and earns me more than I ever did when I doubted myself. While doing my then side-business and working as a teacher, I made more money than I ever had in my life, which allowed me to save and pay off tons of bills. With the internet, social media, and networking, there are plenty of ways to maximize your talents and sell them to people. It could even be as simple as selling items you no longer use on eBay. Be creative!

p.s. How to Afford Traveling (And Everything Else), and How to Earn Money Blogging.

Stephanie of The Vibrant Living Project

If you haven’t heard of Stephanie’s blog, then you should mosey your little butt over there. She’s got a wealth of useful topics, often centering around helping you grow and improve your life. As a health coach, she totally knows her stuff! Her posts range from zapping fear and loving your quirks to the perks of being vulnerable and how to deal with change productively. Don’t you love her already? She also has fun get-to-know-you posts, like this one with seven confessions. She’s even planning to start hosting workshops as soon as next month. Steph has got it goin’ on…go see why!

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Mariah of Food, Booze, and Baggage

Mariah is the face behind the aptly-named blog, Food, Booze, and Baggage, where she talks about all three and then some! For starters, you can get to know Mariah’s interesting story right here and you can learn about her decision not to have kids over here. She even has a list of “child-free” bloggers — really neat to get a new perspective! Like the word, “baggage” suggests, she also loves to travel, as you can see by these gorgeous pictures of Belgium and Paris. She’s also a beer-girl (my favorite, too!) and has some cool compilations of beers she’s tried around the world. Mariah is definitely the type you’d want to be pals with. 🙂

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