Tips to Avoid Long-Term Debt: A Practical Guide for Hispanics in the U.S.

Facing debts can be a challenge, especially for those of us living in the United States, where the cost of living can be high and unforeseen events are the order of the day. However, with a little planning and clear strategies, it is possible to keep our finances under control and avoid falling into debt that can become a long-term problem. In this article, I will share with you practical and accessible tips to avoid debtas if I were having a conversation with you in your living room.

1. Create a realistic and practical budget

The first step to avoiding debt is to know exactly how much money is coming in and how much is going out each month. This will help you avoid spending more than you earn.

How to create a budget?

1. Make a list of your incomeIncludes your salary, extra income and any other source of money.
2. Write down your monthly expensesSeparate fixed expenses (rent, utilities, transportation) from variable expenses (food, entertainment).
3. Establish clear boundaries: Use the 50/30/20 rule:
   • 50% for basic needs.
   • 30% for tastes and entertainment.
   • 20% for savings or payment of debts.

Practical example:
If you earn $3,000 per month, allocate $1,500 for necessities, $900 for likes and $600 for savings or debt.

2. Avoid impulse purchases

Impulsive buying is the enemy of healthy finances. An attractive discount or a "buy now, pay later" offer may seem irresistible, but often ends up in unnecessary debt.

Strategies to avoid impulse purchases:

• Wait 24 hours before buying something that is not essential. Many times, after a day, you realize you don't need it.
• Make a list before you go shoppingAnd commit to follow it.
• Carry only cashThis helps you limit your spending and avoid excessive use of credit cards.

Additional tip: Disable shopping app notifications to avoid temptation.

3. Use credit cards responsibly

Credit cards can be useful, but they are also one of the main reasons people fall into long-term debt.

Basic rules for using credit cards:

• Pay the balance in full each monthThis prevents you from paying interest.
• Do not spend more than 30% of your credit limit.If your limit is $1,000, do not spend more than $300.
• Avoid cash advancesInterest rates are usually much higher.

Practical example:
If you have a card with an interest rate of 18% and a balance of $1,000, you could end up paying hundreds of dollars in interest alone if you don't pay off the balance quickly.

4. Build an emergency fund

One of the best allies for avoiding long-term debt is to have an emergency fund. This fund will help you cover unexpected expenses, such as a car repair or a medical bill.

How to build an emergency fund?

• Set a goalIdeally, you should save at least 3-6 months of your basic expenses.
• Saves automaticallySet up automatic transfers to a savings account every time you receive your salary.
• Start smallIf saving $1,000 seems like a lot, start with $20 or $50 per month.

Practical example:
If you save $50 each week, in one year you will have accumulated $2,600, more than enough to cover unforeseen events!

5. Live below your means

This advice may seem simple, but it is one of the most important. Living below your means means not spending everything you earn and avoiding lifestyles you can't sustain.

Tips for living just enough:

• Choose affordable housingDo not spend more than 30% of your income on rent.
• Purchase of used vehiclesA new car can depreciate up to 20% in the first year.
• Search for free activitiesMany communities offer free events such as concerts, classes or workshops.

Practical example:
Instead of paying $5 for a daily coffee, invest in a home coffee maker. You will save more than $1,800 per year.

6. Prioritize the payment of your existing debts

If you already have debt, it's crucial to address it before it grows. High-interest debt, such as credit card debt, should be your priority.

Methods to pay debts:

• Avalanche methodPay the debts with the highest interest rates first.
• Snowball methodPay the smallest debts first to gain motivation.
• Debt consolidationIf you have several debts, consider combining them into one payment with a lower interest rate.

Practical example:
If you have three debts ($1,000 to 20%, $500 to 15% and $200 to 10%), the avalanche method will recommend that you pay the $1,000 debt first to reduce the total interest.

7. Look for alternatives to generate extra income

Having an additional source of income can help you avoid debt and build a stronger financial cushion.

Options to generate extra income:

• Freelance workIf you have skills such as design, writing or translation, platforms such as Upwork or Fiverr can be useful.
• Product salesYou can sell used items on platforms such as eBay or Facebook Marketplace.
• Classes or tutoringIf you master a subject, offer classes in your community or online.

Practical example:
If you work as an Uber or Lyft driver on weekends only, you could earn between $200 and $400 extra per month.

8. Educate your family about finances

Avoiding debt is not just an individual effort; it should also be a family effort. Talking about money as a family can help you set shared financial goals.

How to involve your family:

• Speak openly about the budgetInclude your children so that they can learn from a young age.
• Establish joint savings goalsLike a vacation or the purchase of a car.
• Avoid overspending on celebrations: Look for creative and economical ways to celebrate important events.

Practical example:
Instead of spending $500 on a birthday party, host a get-together at home with games and homemade food.

Conclusion

Avoiding long-term debt is not an overnight process, but with consistency, planning and the right advice, it is completely achievable. Every small step you take today whether it's creating a budget, reducing your expenses, or starting to save brings you closer to a more stable and worry-free financial future. Remember that your finances are a tool to build the life you want, and keeping them under control will allow you to reach your goals without being limited by debt.

It doesn't matter if you're starting from scratch or if you're already in debt, the most important thing is to take action. Identify areas where you can improve, seek support if you need it and celebrate every accomplishment, no matter how small. Every dollar you save or every debt you eliminate is another step toward a healthy financial life.