4 ways to stay out of debt

As of 2023 Americans owe more than $1 trillion in credit card debt, but being proactive and completing four key steps can help consumers avoid credit card debt. Joining PennyWise this week is personal finance writer at WalletHub, Chip Lupo, to describe in detail how to accomplish the four steps.

Read more on WalletHub here!

About this program

Nat Cardona is host of PennyWise as well as Lee Enterprise's true-crime podcast Late Edition: Crime Beat Chronicles. Lee Enterprises produces many national, regional and sports podcasts. Learn more here.

Chip Lupo is a personal finance writer for WalletHub.com, specializing in credit cards, credit reports and scores, and debt management, and has worked remotely from the Columbia, SC area since joining the WalletHub team in 2018. Chip manages all the finances in his household and has become adept at employing strategies to minimize the family’s debt.

Episode transcript

Note: The following transcript was created by Adobe Premiere and may contain misspellings and other inaccuracies as it was generated automatically:

Welcome to PennyWise, a Lee Enterprises Podcast. I'm Ambre Moton the producer and editor of the show, filling in for Nat Cardona. Americans collectively owe more than $1 trillion in just credit card debt as of 2023. So it's fair to say that staying out of debt is a challenge for many people. Luckily today, our friends at Wallet Hub published a story called How to Stay Out of Debt, Tips, Strategies and more.

To help with that, I'm being joined by Chip Lupo of Wallet Hub to go over some tips for staying out of debt. Chip, according to this article, there are four main steps to staying out of debt. The first step is to cover all of your bases. What exactly does that mean? Well, it's a tiered process here. And start off.

It's important to note that these rules are these tips. While they primarily apply to people who have spent months or years trying to get out of debt, they're also very helpful to someone starting out managing finances for the first time to avoid getting into debt in the first place. So there's just four basic steps and we'll expand on these as we go.

You want to build an emergency fund? That's that's the first step. You want to set a budget very important and stick to it. What you set your budget develop a routine which involves checking your finances to make sure you're staying on budget. And then finally, most important, avoid repeating any past mistakes that got you into debt. That's definitely a good one.

And then you said developing a routine. What can you. Can you just kind of explain that a little bit more? Well, developing a routine is just basic habits. Once you once you set a budget, you want to make savings, a recurring expense. Most people put savings on the back end when it comes to prioritizing. You want to make that part of your part of your budget the same as your mortgage, the car payments, utility bills, a certain amount every week, every month, according to your finances.

But make sure that's built into your budget. That's part of the one step of the routine. You also want to review your monthly bills regularly, particularly those that fluctuate power bills, utility bills. Check your cable bills regularly or phone bills for any, you know, rates go up, things like that. So if you want to stay on top of that, because sometimes price hikes can make a major change to your budget, you also want to keep track of any savings investment accounts, review your bank statements regularly, check for fees, check for anything, any hidden costs.

Look for any any types of frauds or any errors in your account. So you want to stay on top of that. You also want to employ what we call the island approach to credit card spending, which means using different credit cards for specific expenses. If you have a gas credit card, you want to use that to track you fuel purchases every month.

That way, they're isolated. They're itemized on one statement. And then you can adjust your budget accordingly. Now, of course, that approach works best if you plan on paying your credit card bill in full every month, which is something you should be doing anyway in order to stay at it. You also. Okay, so the next thing in this article, it says that you should activate, safeguard or safeguard just it's more like protecting your investments.

You want to sign up for credit monitoring checks, anything that checks for identity theft, anything along those lines that will more or less keep your mind, your ease, particularly if you're one of these people who's been in debt and th