Living a debt free life is what everyone dreams of. And yet we know that so many people today are indebted to at least one, two or numerous creditors. If you’re one of them, are you looking for ways to solve your debt problems? What is the real key to living a life that is debt free? Consider the following points.
A Simple Life is a Debt Free Life
If you’re stuck in debt, ask yourself, how did I come to be in this difficult situation? What has led me to this serious debt trouble? Most people who got stuck in huge debts started out with smaller debts that are left unpaid. For instance, credit card debt has led many people to bankruptcy. Uncontrolled credit card use, neglecting payment due dates, frequent splurges- these habits can easily put you in bad debt before you even realize that you’re already in trouble.
Although it isn’t wrong to acquire debt, borrowing more than what you need and what you can pay back can bring serious complications. Whether you’re in a debt crisis or on the boundary of bad debt, it’s about time to pay attention to your lifestyle and spending habits. An objective and realistic self-examination can be done by calculating the exact figures.
Jot down all your expenses (personal expenses, transportation allowances, utility bills, debt payments, loan payments, credit card balances, etc) for the entire month.
Make sure that you include every single cent you spent and sum up everything on your list. Now, subtract the total from your monthly income.
Have you been spending more than what you can afford? After calculating all your expenses, do you still have money left to put in your savings? Are your expenses so big that your income is barely enough to cover for your debts? Knowing the real answer to these questions will help you realize that some changes in your lifestyle really needs to be done.
Repayment of your debts should be on top your priority.
Remember, the sooner you can pay off your debts, the closer you are to recovery. The next step would be to cut back on your expenses. Which of your personal costs can you give up or cut back in order to save money? This could mean sacrificing some of your luxuries, but if you’re really serious about living a debt free life, then it’s definitely worth the compromise.
For instance, can you give up your cable or subscribe to a lower cable plan? Do you have magazine or online subscriptions that are adding up to your expenses? Is it possible to carpool with a friend instead of driving your own car to work everyday? Can you bring your own lunch to work instead of eating out? Can you cut back on your grocery expenses- perhaps by using coupons or by not including unnecessary things in your shopping cart at all? Think of ways on how you can simplify your life and save your money and you’ll be surprised at how even the smallest savings can make a big difference.
Finally, as you strive to keep up with your payments, don’t forget to save up.
As soon as you’ve completed all your debt payments, make it habit to set aside a portion of your income for your savings account and personal emergency fund. By saving your money, you’ll have funds standing by when crises or unexpected circumstances arise.
