Steeringclear of unwanted debt is a great way to manage your finances andrelieve daily stress, which seems to become increasingly more stressfuleach year.

1. Live below your means.You cannot become debt-free if you spend more than you earn. It’s thatsimple! Financial stress relief is called “money in the bank” or”positive cash flow.”

2. Decide where you want to spend your money.Don’t let others decide for you. Know how much money you are bringingin, how much goes out and to where it goes. If you are not satisfiedwith the answers you get from this exercise, now is the time to changeyour spending habits. You (and your significant other) are ultimatelyresponsible for how your money is spent.

3. Pay your bills on time, every time.Managing monthly bills is an essential part of staying debt free andmaintaining a good credit rating. If you find this difficult, come upwith a system to ensure that bills are not paid late.

4. Set financial goals, both short- and long-term.Having goals in place makes it easier to make the necessary spendingcuts to get what you really want. Without reasons to cut spending andsave, you will constantly be under pressure to spend money you don’thave for things you don’t need.

5. Use credit only as a tool and with a plan. Figureout how and when you will pay the balance. Imagine building a housewithout a plan or blueprints. That’s what your financial house willlook like, too, without a plan. Your goal should be to pay for creditcard purchases within three months. Remember, unlike wine, cheese or mywife, debts do not improve with age.

6. Have an adequate emergency savings fund.Life will throw curveballs at you, ranging from the need to replace aworn-out washing machine to a temporary job loss. Three to six months’worth of bare-bones living expenses should shield you from most ofthese problems. Can’t do three months’ worth? Start with three days’worth and watch it grow as saving becomes a habit.

7. Learn how to invest your savings.Your money has to earn more money to keep you out of debt, especiallyin your later years. Take a class, find a referral to a great adviseror just start reading. Do it your way, but do it; and start now!

So there it is, my seven for ‘07. May you have a debt-free New Year!

TheDebt Adviser, Steve Bucci, is the president of Money ManagementInternational Financial Education Foundation and the author of “Credit Repair Kit for Dummies.” Visit MMIfor additional debt advice or to ask a question of the Debt Adviser, goto the “Ask the Experts” page and select “debt” as the topic.