This article will discuss 6 Easy Ways to Stay Debt Free. Nobody wants to remain in debt, especially with the stress and anxiety that comes with it. It may also appear impossible to stay in debt free but it’s actually possible.
A lot of people have made the choice to stay debt free despite their ages and income level and it worked for them. Staying debt free can help you attain financial stability and freedom faster. In this article, you will discover 6 Easy Ways to Stay Debt Free.
5 Easy Ways to Stay Debt Free
Nobody wants to be in debt because it’s stressful and the money that would have been used for meaningful projects will be channeled into debt repayment. A debt-free life also opens you up to new opportunities that will help you reach your goals faster. Below are some tips on how to be financially debt free.
Control Your Expenses
It’s true that every household has its own expenses but you can learn how to control yours to stay debt free. You should keep your monthly expenses as low as possible because it is a good way to control your spending.
You need to track your monthly expenses. Take note of what you spend every month and try to cut down on unnecessary spending. You can cut down on unnecessary spending by taking a list of your expenses and striking out the less important ones.
You should know that unnecessary expenses might be hard to strike out from your list. This is because you may see them as rewards or pleasure making it hard to give them up. You need to ask yourself if you need that item at the moment and if you will have enough money after you buy it. With this, you should be able to know if the item is meant to be in your monthly budget.
Save More
The more you save, the faster you attain financial freedom. Firstly, you need to know where to cut down on your expenses as earlier discussed. The money you get from cutting down unnecessary expenses should be channeled into savings.
Simply put, you get more money to save when you spend less. You can use these savings to pay off debt or finance other useful projects you have.
Automate Your Savings
It is very important you save a percentage of your income. Most people find it hard to put aside a percentage of their income to savings. Sometimes, it may be because they forget to save.
If you always forget to put some money aside for savings, you can automate the savings. Automate not only your savings but your retirement contributions too. There are some savings apps that can help you achieve this.
Automate Your Debt Payment
Another reason why most people are in debt is that they skip their monthly bill payments. If you always forget to pay your bills, you can choose to automate the payment. You can choose to set automatic transfers from your bank account to your credit card.
Also, you can choose to use a calendar or automated reminders to keep track of your due dates. A debt management app or budgeting app also comes in handy when you want to track your progress with paying off debts.
Make Extra Money
If you have already existing debts, you should try looking for an extra source of income to pay off your debt. You can devote any extra time you have to get a side hustle. While you earn more, try to keep your expenses below your income. You can use your skill set and free time to earn extra money and this can help you pay your bills.
Keep an Emergency Fund
Another way to stay debt free is to keep emergency funds. You should keep emergency funds to cover unexpected expenses such as medical bills, or even missed paychecks from a job loss. This is much better than using credit cards to cover emergencies. You don’t have to pay any interest.
In conclusion, you need to develop good habits to stay debt free. One of the habits you should develop is a good spending habit. Also, you should make saving a regular habit. Even if you have to do so in small amounts. Planning and budgeting will also help you live a debt-free life.
Good Debt Vs Bad Debt
Before going into the easy ways to stay debt free, you should know that not all debts are bad. When yo hear the word “debt” a negative notion may come to mind but this is not so in all cases. When you borrow money to buy a depreciating asset, it is known as bad debt. Simply put, if you borrow money to buy a property that will not increase in value or generate income, it is bad debt.
Good debt on the other hand is considered “Good” because it can help you generate income or improve your net worth. When you borrow money to fund a project that will improve your family life, it is considered good debt. For example, if you take a loan to fund your education, business, or for a real estate business, it is considered a good loan.
FAQs
What are the Key Traits of People Who are Debt Free?
If you want to be debt free, you need to follow after the pattern of people living a debt-free life. People who live debt-free lives are goal driven and disciplined in spending. Also, they are patient and tend to think well before making a buying decision.
Should I Contact a Credit Counseling Company?
If you are deep in debt, you may want to consider the services of a Credit Counseling company. This company will be responsible for helping you get your finances back together. Also, the company will help you create a budget and give you resources on how to pay off your debt.
Will Bankruptcy Clear my Debt?
Bankruptcy can help you clear all or most of your debt. The total amount that will be cleared depends on the type of bankruptcy and the type of debt you owe.
What Happens When I Become Debt-Free?
The first thing that happens when you become debt free is that you have peace of mind. Also, you have more money to spend, save or invest. This is because you don’t have to channel your income into debt repayment.
Is Debt Settlement The same as Debt Consolidation?
No, these two terms mean different things. Debt consolidation allows you to combine multiple debts into one single payment which is usually at a lower interest rate. Debt settlement on the other hand allows you to negotiate with your debtors to reduce the amount you owe.
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