Wednesday, 25 September 2019

7 Ways To Become Debt Free

8 Ways To Become Debt Free

Today we are going to be talking about debt-free, we all love being debt-free for so many reasons, but the main ones are that it gives us freedom, peace of mind, and options. Basically since aren't taking all of our income, and giving it to banks, credit card companies, student loans companies, and car dealerships, and everywhere, it leaves us with a lot more money in our pockets in our banks account that we can decide what we want to do with it.

It keeps us focused on the future, always thinking ahead instead of thinking about things that we already spend money on in the past. Debt keeps you in the past. 

If you are already debt-free and you are looking to stay that way or you are learning how you can avoid debt in the first place and continue your debt-free lifestyle, then this article is for you.

1. Get Yourself Financially Literate

It is so important that you read every single book you can find about personal finance. When I was in this stage I was obsessed, I was reading everything, listening to every single podcast and this really taught me different ways that debt works against you. And that is not a good plan to use debt to fund your life. And that you can actually make money work for you in your favor

But you need to understand how money works and you need to have a basic understanding of certain financial tools that are available to you and how you can use them to your advantage. 

Invest in yourself and spend time getting financially literate and always learn more, there are always things to learn.

2. Live Below Your Means

If you are making $3,000 a month, but you are spending $5,000 a month, you are living well beyond your means, and that means that you are making up that difference with about $2,000 in debt.

This sound extreme, but a lot of people they live this way, they just don't realize it because they are swiping their credit card, and at first, it doesn't feel so bad, maybe you have some payment that you are paying and you don't really notice how fast it is building up.

It is important to live below your means. If this is your situation you have two choices and one is to "cut your expenses" and the second one is to "increase your income". Or I would definitely recommend that you do both at the same time, that is going to help you get that buffer in your life faster.

I think that you can do it, I know it's not easy, I know it takes a lot of sacrifices but there are ways to live below your means even if you are on a low income although I completely understand it's not easy.

3. Get Smart With Spending - Borrow Or Trade.

It's always good to think twice or three times before spending money or before buying things. Let's be honest we live in a crazy consumeristic world and this mindset is really getting a lot of our generation into financial trouble and it's also destroying our planet at the same time.

Instead of buying every little thing that comes up that you need, it's always good to try out borrowing things first from friends, family, your local library. If you need a power tool to hang a picture, you don't necessarily need to head down to store and buy something that you are going to use once and then it collects dust. 

You can try out trading. Trading is an easy way to save money and live a more sustainable lifestyle.

4. When You Spend - Make It Intentional

Let's be real, you are going to buy things sometimes, you are going to spend money, but when you spend, make it intentional. This is important when comes to staying out of debt and especially credit card debt. Buying things to keep up appearances or to impress other people it's not only a waste of money it's also a massive waste of resources.

When you buy something and you do not use it, it just gathers dust or you do whatever with it, you don't use it, it's just a waste and it's unsustainable

When I want to buy something that I think is going to generally make me happy or genuinely feel-a-need in my life, I am learning to focus on quality when I buy the thing I am trying to think more about spending more upfront to get something that is a quality item that is going to last longer.

It's okay to spend, but when you do make it international

5. Have An Emergency Fund And A Spender Fund

For a lot of people, their financial back-up plan is checking account and if there is an emergency, they will put it on a credit card. I know a lot of people rely on credit cards as an emergency fund as a back-up plan, and I really think a credit card is not a good back-up.

You need a little bit of money sitting aside because emergencies come up and every time an emergency comes you are charging it, it's going to add up really quickly. I would recommend if you can even just get a couple thousand put aside, depends on your lifestyles, if you have kids, different kind of factors, I can write a whole article on that.

Spender fund. You can keep it separate from the emergency fund because of things like for example, getting invited to a wedding, traveling and a lot more. And as long as you come back from a trip, just fill that up before you will book anything else.

6. Financially Organized As A Habit

Make financial organizations a habit in the household, this basically means one thing and that is "regular budget meeting". This is very important, you need to always be aware where you are and you just need to be organized if you are not alone in your household, it's really good to get everybody involved like your spouse, boyfriend or girlfriend, whatever. You need to be on the same page.

7. Have Goal And Focus On The Big Picture

Trust me, it is so easy to stay out of debt if you have a plan for your future and you have solid goals in your life, where you are spending your money right now, is that leading you closer to your ultimate goal in life, to your vision and mission for yourself? It's important to have this reality check.

I am always asking, is my spending habit getting me closer to where I want to be in the future? And if it's not, if you ask yourself and it's not, then you probably need to reevaluate some things in yourself life.

Because if you are telling yourself what is important to me is being debt-free, owning a house, being able to travel, being able to have kids one day, or whatever your goals are. If those are your goals, but every day you are going out and spending all your money on clothes, food, and things that are not getting you at all closer to your goals, I think it's time to have a reality check and understand that "where you are spending your money tends to show where you are focusing". where your values lie, and a lot of times this just needs to reevaluated.

Alright, folks, those are my tips and I know a lot of people reading this article they probably think this sound like a lot of work, a lot of compromises, and you know what? Sometimes it is, but I can assure you that it is worth it.

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