businessman use pliers to cut the chain and free himself from debt metal ball. Financial freedom concept.


3 min read
businessman use pliers to cut the chain and free himself from debt metal ball. Financial freedom concept.


Bad debts are like quicksand – if you don’t do something about it, you would sink in deeper. And if you make the wrong move, you would still sink in. For many businesses and individuals, bad debt is an ever-present threat. It is an economic nightmare in fact. No one likes to be in debt and you wouldn’t be reading this if you do.

Pencil Eraser Erasing Debt Word Close-up Of Pencil Eraser Erasing Debt Word On White Paper Debt Stock Photo
Bad Debts

Alas! Hating bad debts doesn’t save you from it. Interestingly, one debt always leads to another and then to another, so it’s important that you learn HOW to save yourself from endless bad debts.

Before it’s too late.

HATING bad debts DOESN’T SAVE you from it.


Not all debts are bad, so you need to know what exactly bad debts are. There are god debts also. Yeah. Debts that you MUST have because they are SUPER GOOD!

Robert Kiyosaki, Bestselling author, Rich Dad, Poor Dad, defines Good debts as debts accrued to purchase assets (whatever brings in more money into your pocket) while Bad debts are debts accrued to purchase LIABILITIES (whatever takes money out of your pocket) and DOODADS (they look like assets but are not assets; e.g. your car, your house).

Now that you know what BAD DEBTS are, let me guide you through how to save yourself from ENDLESS BAD DEBTS.

1. Identify Patterns

There is hardly anything like “a coincidence” when it comes to money and its management. Bad debt is a resultant effect of an error in money management. The first step in saving yourself from endless bad debts is to identify all your money patterns. What do you do first when the paycheck comes? How did you get to this point? What do you spend more money on? “When I owed this money, what did I use it for… when did I pay it”?

Humans are creatures of habit and debt is a habitual action. Remember I said one debt always leads to another. Sit down and analyze your money patterns and habits. Knowing the cause of the problem is the first step to solving it.

2. Keep Track Of Expenditure

Now that you know just how much debt you are in or how bad your money management is, the next step is to record. Keep track of expenditure. Everybody in bad debt has one thing in common, they don’t keep track of their expenditure. Impulse purchases lead to bad debt. If you do not have your expenditure in control, you will always have to deal with bad debts. Record absolutely everything.

3. Categorize And Prioritize Spending

In addition to keeping track of expenditure, you need to always categorize and prioritize your spending. A great way to start is by budgeting based on priority. Settling bills should always come before shopping and needs should be prioritized over wants. That way, you do not run out of the basics and you can save yourself from debts.

4. Make More Money

 If you want to live a debt-free life, then make more money. Who doesn’t want luxury? We all do. It’s annoying and frustrating to have to save up before we can purchase a need/want. Downsizing your expenditure is no fun but it should be done when the need arises but ask yourself, “for how long would you keep downsizing?” So make more money. If you have been thinking that saving would be enough, then think again. With multiple streams of income, bad debts can be avoided altogether.

5. Employ The Three Piggy Bank Rule

Robert Kiyosaki explains this in his book The Beginner’s Guide To Personal Finance. Technically, the three piggy bank rule has to do with paying yourself first, at least 30% of your income before you pay others.

  1. Savings account (10% of your income): Have general savings account for future emergencies
  2. Investing account (10%): a personalized account for investments
  3. Charity/ Tithing account (10%): Give towards a charity or religious course that you believe in.

6. Control Your Emotions

“If you cannot control your emotions, you cannot control your money”

Warren Buffett

Robert Kiyosaki said, “emotions are the biggest cause of financial problems.” There is something called “stress-shopping”. It is when you spend money to relieve stress or to deal with depression. Such purchases often lead to bad debts. So you buy something in a bid to feel better, you owe some money at the end, and you realize that the purchase didn’t even make you happy.

In summary, not controlling your emotions will lead to bad debts. If you have your emotions in check, then you can have your money in check.

7. Know your money

Finally, know your money. Learn, unlearn, relearn. Embrace financial education. For instance, if you don’t know the difference between assets and liabilities, good debts and bad debts, savings and investments; you have a long way to go. so, START NOW! Financial freedom is a journey that begins with knowledge. 

In conclusion, saving yourself from endless bad debts goes beyond getting out of your present debts. It extends to knowing how to prevent bad debts altogether.