How To Start Living a Debt Free Life: 10 Things To Start Immediately
If you are trying to find some strategies on how to start living debt free then you’ll find it Love This article.
Debt is a nasty burden, a reason for unnecessary anxiety and a stalking ghost. The dove approach of closing your eyes and hoping the storm will pass does not help. Unfortunately, most people aren’t taught how to handle money. But there’s hope!
Personally, my family can control our financial habits and control our future in a sustainable way. Here we lay out a 10 step pragmatic approach to staying debt free and enjoying financial freedom.
How to Start a Debt Free Life:
1. Write down all of your debts on paper
The solution to any problem starts with breaking down the problem and taking it one step at a time. Take a notebook and list all of your debts, grouping them into categories; Credit card debt, fee loans, money borrowed from friends or car loans. Do not panic; focus on one debt at a time.
2. Enlarge Your Debt
Snowballing is a categorization of debt based on the interest rate or the lowest amount. If the debt with the highest interest rate is paid off first, it can save you money. A better way, in my opinion, is to list all debts from lowest to highest amount. Snowballing calculators are widely available online to help you rank your debt by interest rate and tell you what debt to pay will help you save money. Take advantage of them!
In addition, you can list all of your debts from the smallest to the biggest. Pay the lowest debt first, then roll this money over to the next sized debt. Once you start paying off your debt, you’ll see that the system works!
3. Create a Realistic Timeline for Paying Off Debt
Create a practical timeline for paying off your debts one by one. Keep in mind your potential income and expenses so as not to create an unrealistic timeline. Keep expectations as realistic as possible to avoid disappointment. It also helps to set small goals. Make the first goal of paying off your smallest debt first and add this to your calendar.
4. Keep track of your Timeline
Now that you have a timeline for paying your debts, you need to monitor yourself. You must stick to the timeline, keep your head up and begin with the lowest amount owed, paying one debt at a time and be patient.
5. Cut Expenses
Living debt free requires sacrifice. If you want to lighten your debt burden, you need to make a list of your expenses and make every possible cut. Every penny you save will help you achieve financial freedom in the long term. For example, if you spend $200 per month on cable TV, there are various ways to find your favourite shows online.
6. Save for a Rainy Day
They say money speaks one language; save me today, i will save you tomorrow. The best practice for living a debt free life is to set up a rainy day deposit account and not withdraw money from it unless absolutely necessary. After you withdraw from it, ensure to redeem it on precedence basis. A rainy day account will be your best friend when something abruptly happens and demands your money.
7. Maximize Income
A little little bit of hard work pays off significantly in difficult situations. If you are battling debt, you need to leverage all available resources to maximise your income. In addition to regular jobs, hone your freelancing skills to make extra cash. You can take advantage of the free tutorials available to learn photo shopping, web development, or other skills to open up new sources of income. All income from the new source must be funneled into repaying the debt.
8. Control Your Temptations
Temptation lures us into buying more than we need or can afford. Unless required, one should avoid frequent use of credit cards. Every time we withdraw a little money and do not repay our credit on time, debt ends up piling up into an uncomfortable burden. PAY CREDIT CARD AND STOP USING IT!
9. Live within your means
Recognizing one’s status and limiting oneself to one’s wealth can bring a few much-needed balance between income and expenses. There are people in the world who can afford to drive expensive cars, wear expensive things, and live very luxurious lives. If you cannot afford it, you haven’t got to go over your budget and burden yourself with debt. There’s nothing wrong with living simply.
Learning to live within your means is the secret key to a happy, debt-free life. I highly recommend taking a moment to appreciate all that you have today. Look at the things you own as tools to get yourself out of debt. For example, our car has been paid off and we can use the extra $600 that will be used to pay off our car loan, to pay off our debt.
10. Self Accountability
Financial freedom demands a system of self-checks and balances. If you want to track your spending and budget; once a week you need to sit down and review your weekly expenses. If you feel like you are spending more than you are earning, you need to balance your budget by cutting expenses for the next week.
This will instill a habit of self-accountability and alter your unnecessary spending behavior. Don’t forget to give yourself a treat once you find out how to balance your budget. The keys to financial freedom are responsibility, self accountability, and finding happiness and fulfillment within your means.
Conclusion
We all need financial support on an ongoing basis. It’s okay to start with small steps to gain confidence in understanding your finances. My wife and that I can pay off 3 credit cards, our two cars, and one student loan now. We still have two smaller loans to pay off, but we are aggressively paying them off every month as we use up all of our previous payments and apply them to our smaller loans.
This easy-to-follow guide can provide you with peace of mind at night and restore relationships, particularly between families. Nothing can tear people apart more than having financial hatred.
I want to thank you for taking the time to read my article on how to start living debt free. I actually hope that its content has been of good help to you.
