3 Moves You Can Make Now to Avoid Debt in 2023

They're really all worth making.

Being in debt can be stressful no matter what. But it may end up being an exceptionally stressful thing in 2023.

The reason? The Federal Reserve has been hiking up interest rates in an attempt to cool the pace of inflation. And so if you have debt with a variable interest rate attached to it, like a credit card balance, your rate might soar in 2023, thereby costing you more money. Similarly, if you first take on credit card debt in 2023, you might end up paying a lot of interest on it from the start.

That's why it's best to avoid debt in the new year. And making these three moves in the coming weeks could help you steer clear.

1. Boost your emergency fund

People commonly end up in debt not because they've spent money frivolously, but because they get hit with an unplanned expense and don't have the money in savings to cover it. If you want to avoid debt in 2023, one of the best ways to make that happen is to build a solid emergency fund if it could use a lift.

As a general rule, your emergency fund should have enough cash to cover at least three full months of essential living expenses -- things like rent, food, car payments, and utility bills. So let's say you spend $2,500 a month on essential living costs but only have $4,000 in savings. While having some cash in the bank is certainly better than having none, that should prompt you to work on boosting your cash reserves as much as you can.

2. Get on a budget

Following a budget could help you make savvier spending choices -- and avoid a scenario where you end up in debt. One of the easiest ways to make a budget is to comb through recent bank and credit card statements, see what your various bills entail and what they cost, and then list them all on a spreadsheet.

From there, you'll want to compare your total spending to your take-home pay and make sure the numbers all add up. If you pledge to not go over in any individual spending category, it could help you stay out of debt.

Related: Best Budgeting Apps

3. Dump expenses that don't do much for you

Maybe you're paying for a streaming service you hardly ever use. Or maybe you like going to the gym but are just as happy to work out by going for a jog instead. The more non-essential expenses you unload, the more cash you can free up for your savings -- and, the more likely you'll be to manage added bills that happen to come your way.

Being in debt might be an especially costly endeavor in 2023. If that's not a scenario you want to deal with, pump more cash into your savings, get yourself on a budget, and make sure you're not spending money on expenses that don't really do much to enhance your quality of life.