By Hughes Federal Credit Union

Buying a home, saving for college and looking forward to retirement are all major milestones you plan for and one thing that can derail those plans is debt. While it’s easy to fall into a debt pit, there are habits you can start building that can help you avoid digging any deeper. Check out these three easy steps you can take to create a path towards living a debt free life.

Create a budget and stick to it
Having a guide that reminds you of where you shouldn’t cross the spending line will be helpful in keeping you living within the means of your paycheck. Calculate your income and expenses. Once you’ve figured out how much you can spend, you’ll be able to make better financial decisions. Avoid buying anything when you don’t have enough to pay for it. Don’t have enough for a special want? Try saving for it and plan to buy it on a later date. Look at your budget and assess where you can cut or reallocate funds, but remember to stay within your budget.

Dedicate 15% of your income to savings
If you’re not spending, you should be saving. Set short and long term goals and start contributing to those goals by setting aside fifteen percent of your after-tax income. While it’s often recommended you save twenty percent, fifteen percent may allow you to pay off debt faster, giving you the opportunity to increase your contributions to a full twenty once the debt is paid off. Set automatic transfers to help you stay on top of saving or even consider splitting your direct deposit into both your checking and savings. Remember, even if you can’t dedicate a certain percentage to savings it’s important to save what you can. Any contribution is better than no contribution.

Don’t dip into your savings unless it’s an emergency
A savings account gives you some security if things get a little tight and an unexpected cost comes your way but unless it’s something you need to take care of right away, stay away from your savings. Consider creating two separate savings accounts: one for long term goals and one for emergencies to prevent you from dwindling your savings towards more important life goals. Account for the expense of having two savings accounts in your budget so you always remember to pay yourself first.

Looking to build an emergency fund or save towards your future? Check out Hughes Federal Credit Union’s savings account options and get started today. Visit to learn more.

About author View all posts

Guest Author