First, we'll start with a couple of cases when no matter what you do, you have to borrow money. Then we'll go on with the cases when borrowing money is an absolute no-no.

When Debt is Inevitable

There are cases when you absolutely have to borrow money. No, I don't mean borrowing bucks because there is a sale at the local store and you are eager to buy a few pieces of furniture or clothing at reduced prices. Clothes, furniture, consumer electronics and the like are rarely that vital. Yes, they might be irresistible but this has nothing to do with sound investment. The cases when you just can't avoid getting into debt are more serious than the inability to control your spendings.

No matter how much you earn, there are always expenses that you can't afford unless you obtain credit from somewhere. A typical example are investments. Even if you are not a business owner, there are many items that can be considered an investment – buying a new car, which is more economical and will help you spend less on gas, buying a new computer to start or expand your home business, which in turn will bring you money, etc. What all these have in common is that you spend money not on pleasure and luxury but on equipment that will generate profits.

Another case when you simply can't afford to be stingy and when you might need some external financing is when there are health problems. There are different kinds of insurance and you might be able to get some bucks, if you get seriously ill but generally an illness affects your budget in two ways – you spend more on treatment and medication and if you are unable to work, you also earn much less. So, knock on wood that neither you, nor your family members have serious health problems.

When Debt is Avoidable

Aside from investment and illness, almost all other cases of getting into debt are avoidable. Well, some of the measures to avoid debt can be a bit of shock therapy but it is much better to restrict one's spending for some time than to go to bankruptcy court, right?

Most of the measures that can prevent debt are very simple – spend less, try to earn more, don't open new credit lines, especially if their interest rates are high. It is easier to say than do but having in mind that most people are in debt not because of illness or investment but because of poor spending habits, probably there is a lot to learn about how to spend one's money wisely:

• Tighten your budget. Poor budgeting is a common reason for getting in debt. With so many temptations that scream for our money it is difficult to keep the budget tight but unless you are willing to get in debt, you have to. Tightening your budget includes cutting all expenses but food, utilities, work-related expenses – forget about pubs, vacations, new clothes. Above all - forget about impulse shopping!

• Resist the pressure to shop on credit. With America and the world living on credit, it might be a tough job to avoid shopping on credit, especially when the discounts are irresistible but shopping on credit is one of the major reasons for getting into debt. Shopping on credit is only OK, when you will be able to repay your purchase back quickly and you will not have to pay interest, or at least not too much interest.

• No pay-day loans. Payday loans are a real nightmare in terms of interest rates. Outstanding balances on credit cards are not better either. Actually, no short-term credit with high interest rates will do you good and if you are already in debt, they are simply burying you deeper.

• Save, save, save! No matter what you do, always attempt to have money for at least a month ahead! Most people have debts that will eat their earnings for months or years ahead and this is the root of the debt evil, so try to make your best to save money. Don't take for granted that you will always have a high income – put aside something for rainy days.

In a conclusion, the measures to avoid debt are really simple but it seems that our generation has forgotten some good old virtues. We spend so much money on luxury goods that it is not surprising that even people with a high income ($100,000 per annum or more) are heavily in debt. And if you don't do something meaningful to save your financial health, nobody can ever be able to help you!