Saturday, 27 June 2020

6 Ways To Stay Debt Free

We love being debt-free for so many reasons but the main ones are that it gives us freedom, peace of mind, and options. Since I am Not taking all of my income and giving it to banks, credit card companies, student loan companies, car dealerships and everywhere, it leaves me with a lot more money in my pockets, in my bank accounts that I can then decide what I want to do with it. It keeps me focused on the future always thinking ahead instead of thinking about things that I have 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. let's get into my tips.

1. Get Financially Literate

It is so important that you just read every single book you can find about personal finance. I was reading everything, I was listening to every single podcast and this taught me different ways that debt works against you and that it is not really a good plan to use debt to fund your life. And that you can actually make money work for, work 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. So 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 say $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 sounds extreme, but a lot of people live this way they just do not realize it because they are swiping their credit card, and at first, it does not feel so bad, maybe you have some payments that you are paying and you do not really notice how fast it is building up. It is important to live below your means. If this is your situation you basically 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's going to help you get that buffer in your life faster. That buffer between what you earn and what you need to live. 

3. Get Smart With Your Spending And Try Out Borrowing

It is 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 is also destroying our planet at the same time. So instead of buying every little thing that comes up that you need. it is 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 a store and buy something that you are going to use once and then it collects dust.

4. When You Spend, Make It Intention 

This is important when it 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 then you do not use it, it just gathers dust. And when I do want to buy something that I think is going to generally make me happy or genuinely fill-a-need my life, I am learning to focus on quality. This is a new thing for me because I am frugal, but when I buy things now I am trying to think more about spending more upfront to get something that is a quality item that's going to last longer. I think that that is something that you need to retrain yourself on.

5. Have An Emergency Fun And A Spender Fund 

I know a lot of people rely on credit cards as an emergency fund as a back-up plan. And I think a credit card is not a good back-up plan you need a little bit of money sitting aside. You need that emergency fund because emergencies come up, and if every time an emergency comes up you are charging it, it is going to add up really quickly. I have an emergency fund of about six months living expenses which is something I would recommend, if you can even just get a couple thousand put aside depends on your lifestyle, your income, if you have kids, different kind of factors, I can write a whole article on that but for me, I have decided for a six-month emergency fund and then I have also a spender fund that I keep $1,000 in. So for me, it's checking account, spender fun, emergency fund, that's how I stay out of debt.

Read 6 Bank Accounts You Need To Have

6. Have Goals & Focus On The Big Picture 

Focus on the big picture and know the future will come. Trust me, it is so easy to stay out of debt if you have a plan for your future and if you have solid goals in your life. For me, this means having a strong vision and mission for my life overall which I know sounds like a big thing but I like to discuss every now and then and write it down and think about it and then I regularly have reality checks where I go. John, where you are spending your money right now, where you spent in the past month, is that leading you closer to your ultimate goal in life, to your vision and mission for yourself?. It is important to have these reality checks. So I am always asking is my spending habit getting me closer to where I want to be in the future. And if it is not if you ask yourself that and it's not, then you probably need to reevaluate some things in your life because if you are telling yourself what's important to me is being debt-free, owning a house, being able to travel, being able to have kids one day and pay for that, or whatever your goals. 

If those are your goals, but every day you are going out and spending all your money on clothes and food and things that are not getting you at all closer to your goals, I think it is 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 be reevaluated, and I do this on myself all the time, I have these reality checks.

Hopefully, you got some value from this article

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