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With America on the edge of a recession, credit will soon be much harder to obtain. Since purchasing things on credit is the trigger for going into debt, this will force many people to reassess their spending and lifestyles.

In order to stay debt free it is important to understand your financial situation. You should always have a budget, in which you record all your income and all your outgoings. If you are spending more than you are earning you have a problem, and need to adjust your spending accordingly.

Differentiating between 'needs' and 'wants' is also important. A 'need' is something like food, whilst a 'want' is something like cable television. If you can live without it, it's not a need.

Cut back on unnecessary expense, such as television services and standing orders for video game subscriptions.

Track all your spending, so you know where every dollar is going. It's often surprising how much we spend each month on a coffee and muffin, or bag of chips from a vending machine. Much as the smoker can easily spend enough for a new car during a year of smoking, so the rest of us can fritter away our savings on snacks, treats, new clothes, and impulse buys.

Instead of renting movies from blockbuster, get them from your local library.

Practice living frugally for a few weeks, and see how much you save. Replace brand name products with generic ones, and stop eating out.

Get rid of your credit cards - cut them up and throw them away. The only way to stay out of debt is to not spend on credit.

If you have current debts, such as student loans, focus on paying them off. Divert a large proportion of your income into debt repayments until you are clear. Better for you to live frugally for a few months than for you to find yourself in trouble later when you don't have the resources to cope with it.

Do not hide from your spending habits, but confront them. The quicker you deal with a potential problem, the quicker you can solve it.

When you are out of debt, try to avoid the "Now I am free, I can spend as much as I want!" trap, or you will quickly find yourself back in debt! Continue to live frugally, although begin to treat yourself occasionally, and start to save up an 'emergency fund', to help you deal with any future problems such as car repairs or medical bills without having to rely on credit.

Ultimately, you are in control of your own finances. Be responsible, and think of your future.

Learn more about this author, Suzanne Fleming.
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