Are you in a point in life where you think you will never live a debt-free life?
You might be thinking I’m doing everything I can, but the debt is still there after a year of struggling. I’ll be honest with you, it’s not easy to get rid of debt. If you don’t keep a check, it piles up.
But there are many people who are living a debt-free life after getting out of thousands of dollars of debt. I have a few friends who have managed to do just that.
How did they do it?
6 Tips For a Debt-Free Life
Well, I talked to a few of my friends who have managed to achieve a debt-free life. They all now consider themselves the experts at getting out of debt. And they think they now have a duty to the rest of their debted comrades to get them out of debt too. Here are some tips they want the rest of the world to know:
Make a Plan
Getting out of debt might seem like swimming in the opposite current. You might be ready to quit. But that’s because you don’t have a plan. A detailed, structured, actionable plan.
Start with listing your debts. If you don’t, talk about monthly payment plans with your creditor. Request a payment plan that you know will work for you; something you can pay easily each month. You might consider consolidating all your debts together. Pay off your monthly installments on time. You don’t want a derogatory item your credit report.
Once your monthly payment plan is set, list down all your monthly expenditures. Your monthly expense and payment plan should be lower than your current income. You can’t be spending more than you earn.
Install a Budget App
After you have your plan, you just have to make sure you stick to it. You can only do that if you list down and later track all your expenses. Even if you buy a cup of coffee, it should make it to your expense sheet. Make a habit of writing down all your expenses to keep track of them.
That might be hard if you sit down to write down your expenses at the end of the week, or even the day. With a budget app, you can list down your expenses on the go. That way you would be up to date on your expenses and won’t have to rack your brain for a missing $11.07 expense.
Make Saving a Nonnegotiable
You don’t know what’s coming to you in the near future. I don’t want you to start worrying excessively about what’s going to happen in the future, but you need to be prepared. Also, you probably will need retirement money or money for your kid’s college tuitions.
Every month, set money aside in a saving account. You might be tempted to skip a month or two, but don’t! Consistency will set a habit. When savings turn into a habit, you know you are in a good position financially.
The rule of the thumb is to put at least 20% of your income into savings. If you can put aside more, that’s even better. You might even save enough to pay off your debt in one go!
Find Ways To Make Money on the Side
‘Don’t rely on a single source of income’. That’s what Warren Buffet says. If you want to take it from the expert, then who’s better than him? After the financial crisis of the recent past, it’s clear that relying on a single source of income can be risky. Especially if you are in debt.
You might not realize it but there has been a better shift in the economy. Small businesses are booming as a result of technological advancement. There are so many opportunities for earning money online.
Experts advise thinking your side hustles through before investing time and money in it. You probably have a friend who has already quit his day job and is making five-figure earnings from his side hustle by now. Talk to them. Ask them for advice.
Cut Out The Extras
All of us have these. Things that we don’t really need in our lives. It could be a gym membership; a gym you might only be going to once or twice in a month. These extras chip away at your dream of a debt-free life without you realizing it. With a month or two of using your budget app, you will get what I’m saying.
Some ways to cut down the extras:
- Switch off or unplug unused electrical items.
- Buy in bulk.
- Cancel club memberships that you don’t use.
- Switch to cheaper memberships.
- Review your grocery bills.
- Curb your spontaneous purchases.
- Eliminate unused (or rarely used) services and subscriptions.
You will always have a friend who goes on a shopping spree every week, comes home to send you all the pictures. And now you want to go shopping. Then, there’s always a great sale going on. My advice is: Don’t go shopping. If you really need something, buy online.
We live in a culture where there’s a new trend every month. Something better hits the market every week. And you just have to get it. But how decides what you have to buy? It’s you!
Yes, buying the new thing will make you happy. But that happiness will only last a few days or a week at most. Your debt will last way longer than that.
Be happy with what you have. Discover happiness in things money can’t buy. Rewrite your achievement scale to include non-materialistic things.
These six lifestyle changes will get you a debt-free life if you will only commit to them. It may require time, and probably some distracting, but you will achieve so much more if you stick to them.