Keys to Living a Debt Free Life
Having some sort of debt is simply a way of life for a majority of Americans, young and old. While there are different types and levels of debt, carrying too much of it is the biggest source of stress for many households.
It can be a difficult change to make and take years of dedication, but living free of debt is possible. Here are some helpful tips for living a debt free life.
Be Willing to Cut Corners
If you want to be debt-free, you’re going to have to make some uncomfortable spending choices. Depending on how much debt you have, your level of income, and your family size you may need to make some generous cuts to your spending and what you spend on.
When you have debt, it’s because you financed what you couldn’t otherwise afford. So, if you want to get out of debt, you’re going to need to make room to repay it; you can do this by cutting spending in as many places as possible, such as:
- Cut your cable plan
- Only cook meals at home
- Reduce your grocery bill
- No spending on clothing, or if anything is needed, only buy used
- Take steps to reduce your water and electric bills
- Search for coupons before making any purchase
- Only participate in free activities, such as hiking or visiting the library, during your time off
Remember, many of the cuts you make in order to get out of debt don’t have to be permanent. Utilize spending cuts to achieve your debt free goal, then simply stick to responsible spending afterward.
Live Within Your Means
Living and staying debt free means you probably need to adjust your lifestyle to accommodate your true finances. Student and medical debt aside, if you’re in debt, it’s probably because you were spending more money than your income actually allowed for. Take a moment to assess how much your spending in accordance with how much income you and your family are bringing in; are you seeing an imbalance?
Save
Debt often comes from unplanned events or emergencies that had to be financed, such as job loss or health problems; having emergency savings in place can help you avoid this problem should it arise.
Make room within your monthly budget to save towards an emergency fund. Your goal should be to save at least 3 months worth of living expenses; doing this can go a long way to keep you out of debt during the next life-changing event.
Find Contentment
We often over-spend and find ourselves in unnecessary debt later because we feel the obligation to make certain purchases. Maybe you financed a car that’s otherwise out of your price range because you don’t feel comfortable driving something older or more basic. Perhaps nothing less than name-brand clothing is what you’ve always insisted on wearing because that’s what your friends and neighbors do. Taking an expensive once a year vacation to Disney World because it’s fun for the kids may be something that’s hit you hard in the debt area.
When it comes to getting out of debt and staying out of debt, learning to be content with things and stepping out of the “keeping up with the Joneses” attitude will go a long way. When you take a step back and look at it, you may find that a lot of purchases you make and spending you do are related to what social norms and expectations are; but the same rules shouldn’t apply to every family or spender. Make choices based on your needs and personal finances, not what you feel is expected of you; when you start to do this, you may start to see some savings and experience less stress overall.
Stop Impulse Buying
Spending money on unplanned purchases can be the number one budget-killer and can contribute to racking up some serious debt. If your goal is to live debt free, you’ll need to reign in any impulse shopping you may be doing. This is not to say that you have to stop spending money on things that are fun, but you should instead budget for things of that nature; give yourself an allotted amount within your monthly budget for unnecessary spending.
Try setting a 24-hour rule on impulse purchases; essentially, if you want to make an unplanned buy, wait for 24 hours before purchasing the item in question. You’ll often find that when you hold off and think about a purchase first you won’t end up completing the transaction.