Debt proofing is a financial management system based on essential standards that one weaves into the entire thinking process of financial planning. Assumptions are based on mathematical laws that inform a fixed, determined course of action through most of life. It is self-preserving and avoids self-deceit. It avoids all debt that does not generate an asset as a pay-off and boost your net worth.

You must know your plan. Unless you adhere to a plan to reduce your money leaks due to high interest and over-spending, you may become a slave of debt the rest of your life. You might earn $60,000 per year, which translates to $2,700,000 over your working years. However, unless you know how to avoid over-indebtedness, a large part of that fortune will be eaten up.

Why debt-proof your lifestyle? Financial problems can put strain on a relationship or business. Many people are full of stress, fearing they are just one paycheque from being homeless. When you buy things as you can afford them, you will teach others (such as your own children) never to feel “entitled to instant gratification” which has harmed the industrious nature of many youth today.

Don't view money as simply available for spending. Take the view that “money is for managing first”. When you shift your paradigm to this perspective you will see yourself as a money manager, or steward—a caretaker of your income on behalf of those you love and care for. After a while it will become unsatisfying to spend money that has not gone through your managed decision process first—a coherent method of financial planning through which you examine your money before you appropriate it, disperse it, invest it, and spend it. Learn this law of money—money without categorically precise parameters of use, tends to disappear.

Give to help others. It makes sense to help those less fortunate via some form of a charitable giving plan. Money is only a symbol of energy that is traded for work expended. Energy that is not flowing towards good purposes, tends to get bottled up—like money not invested, there can be no growth as it is not being put to good use. Giving, for example, to the poor, is a good way to initiate a beneficial activity as you administer your money.

Pay yourself regularly. Set up an automatic monthly investment purchase which is taken directly from your pay, either by using an employee investment plan, or with a monthly pre-authorized automatic cheque investment (a PAC plan).

Never take on more new debt. Here we are talking about not taking on new unsecured debt. This is the type that has no collateral, and carries a high interest rate. This type of debt works against you to enslave you to repayments of the principal plus very high interest. Smart borrowing is usually characterized by a loan, which provides a certain level of safety for both the borrower and the lender. In other words, if either the lender or borrower want out of the arrangement, there is a safety net to do so. For example, if the borrower can't afford the payments, he or she can sell the purchased asset to repay or adjust his or her financial situation.

Smart borrowing usually offers lower interest rates, and is collateralized (secured by an asset, such as a car in relation to a car loan, or a home in relation to a mortgage). Smart borrowing also is debt that provides an asset that is useful for more than three years, and hopefully increases in value over the long term. Looking at credit card debt, the warning bells ring. The criteria of smart debt is not met; there is nothing collateralized, thus a high interest rate is charged to trade off the risk to the lender.