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Debt is the result of spending or borrowing money that you do not have or will not be able to pay back immediately. The state of owing money to a person or organization can put a significant strain on an individual’s resources. With high interest rates and an average household debt of $15,000, many people are finding it difficult to navigate their finances. Debt free living is a smart and attainable option for many who are willing to make the sacrifice, no matter whether you are a real estate developer or a stay at home dad. If you are ready to start saving and get a handle on your finances today, keep reading below to find out our top 6 tips for debt free living.
Be Goal-Driven
If you want to get out of debt, you have to have a goal-driven personality. Debt free living is not easy. It takes a lot of sacrifice. That is why you need to be able to remember your end goal every step of the way. Having that goal in your mind at all times gives you something to strive for. Envisioning your goal of debt free life needs to be able to get your through the tough times, like when you have a Starbucks Frappuccino craving and are tempted to go over your coffee budget to get one. Make sure you change your mindset to become goal-oriented. This is the only way you will be able to achieve your goal of living a debt free life.
Track Your Spending
This is the first and most important tip of debt free living. When you keep proper track of your spending, you are able to see exactly where your money is going and, more importantly, if it is worth it. Write down everything you buy over the course of one month, including what you pay for hosted VoIP, and see where you can limit yourself. This is a great practice for someone who may need an extra push to begin living without debt.
Start Paying In Cash
The reason people go into debt is because they spend money that they do not have. Paying in cash will eliminate this problem. If you only buy what you can afford, you will soon find that you spending less and are much happier with the purchases you decide to make, besides, maybe, the FICA taxes you had to pay to get them. Restricting yourself only to spending what you can manage to save up will have a significant impact on your ability to live a debt free life.
Pay Yourself First
This goes for everyone whether they are trying to get out of debt or simply stay out: pay yourself first. When you receive your paycheck you should already have prioritized your most essential needs – food, shelter and transportation. After those bills are paid off, the next person that you should pay is yourself. Putting money into your savings is necessary to help escape the cycle of debt.
Cut Out The Extras
The key to debt free living is to live within your means. This goes without saying when you start to pay for everything in cash. However, you can go above and beyond that by cutting out the unnecessary payments in your life, like paying for stock photos online. Many people choose to eliminate their cable bill and opt out o subscription services. If you want to live comfortably debt free, be sure to track down your unnecessary spending.
Ask And Receive
The last of our debt free living tips is to simply ask, just like a VA loan. Many borrowers do not realize that they can save a ton of money just by requesting smaller payments for their car, phone bill or loans. Write down your areas of spending and give each company or bank a call. They can help assist you with a payment plan that is more realistic for your new budget.
Debt free living can be a huge relief for many individuals when they receive their online credit check report. However, in order to achieve it you must make sacrifices. Little things like cutting out cable and paying in cash can make a big difference. Follow these tips above to start your journey towards debt free living.
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