Being debt free should be a goal for everybody. Right now, there are many Americans who are swimming in debt. Life is expensive…lets face it. It doesn’t help either that buying things you don’t need with money you don’t have has become prevalent in this country.

Although there are quality debt consolidation and debt relief counseling companies and consultants out there, you should still do what you can to not put yourself in that situation. For those who have some debt and those who are debt free and want to keep it that way, here is my 4 step method for staying ahead of debt.

1. Create a monthly budget.

A monthly budget is an absolute necessity. Ideally, you want to know exactly how much in monthly expenses you have. Compare this to your monthly income and you have the only two numbers you need. Figure out how much you need for bills each month and see what you have left over. When you get this figured out, you are off to a good start.

2. Direct deposit your paycheck into separate accounts.

If your employer offers direct deposit, take it. Apply for online banker at your bank so you can have even more control over your funds. Create at least 3 accounts for yourself: bill paying, spending and saving. Once you have created your monthly budget, you know exactly how much you need to cover your bills for the month. Do the math depending on how many times you are paid in a month and put the corresponding amount in your bill paying account. Whatever is left over, put in your spending and saving accounts in accordance with your personal preference.

3. Utilize “the envelope” system.

The envelope system can be very useful. What this is is taking your spending money and separating it into actual envelopes. You can title these envelopes “gas”, “food”, “entertainment”, “clothing” etc. The point is to have a set amount that you cannot go over. Make sure to budget these things as well so you have an idea of how much you spend.

4. Make existing high-interest debt a priority.

Take your existing debt seriously. If you have a high interest credit card with some accumulated debt on it, take care of it first. Even if it cuts into your spending and savings, I would definitely recommend getting your high interest debt paid off in this economy. In can do nothing but help.