9 Smart Ways to Stay Debt Free- How to stay debt-free AFTER you’ve paid off all of your debts.
Debts can cause you to be financially unstable and oftentimes create problems in your personal life. Living a debt-free life allows you to stay on top of your finances. In a nutshell, the best way to lead a happy life is to stay debt-free.
How do you stay debt-free in a day and age where consumerism has taken over? Well, the answer is not always that simple.
By focusing on these 9 ways, you can stay debt-free even if you’re surrounded by a bunch of spenders.
Here are some smart ways you can stay debt-free.
1). Don’t spend more than you earn
Many people spend more than they actually earn. This habit can lead to getting into more debt fast. It can sneak up on you before you know it you’ll be trapped in your old habits of impulse spending. It is important to live within your means. When you have enough savings, you can easily say “no” to getting into more debt.
2). Embrace a personal budget to avoid overspending
Having a well-planned budget is as necessary as toothpaste in your bathroom cabinet. You need to follow the budget to live debt-free in your life because it helps to avoid overspending, pay all the necessary bills, and most importantly grow savings.
Free online budgeting apps like Mint are perfect for beginners to plan out their first budget. Make sure you cut down unnecessary expenses and focus on saving money while creating the budget.
Paying all the monthly bills on time is important. If you don’t pay your monthly bills in full, you will be hit with a lot of late fees and may have to incur debt to “catch back up” again.
3). Pay with cash to curb expenses
Anything from refinancing your current mortgage loan or skipping that daily coffee on your way to the office can be a wise way of saving money every month.
Make a list of the daily expenses (transportation costs, grocery costs, entertainment and others). Carry some cash instead of your credit cards to hold the over shopping urge. Don’t miss any single area so that you may be able to curb expenses wherever you may feel it’s possible.
Paying with cash is scientifically proven to help you spend less money.
4). Use your credit cards carefully
One of the main reasons behind personal debt problems is the careless use of credit cards. Using multiple credit cards is not good. It just increases your monthly bills.
It is a good rule of thumb to pay your credit card bills in full and on time every single month.
If you don’t do that, you will start accumulating interest.
Don’t purchase an item with a credit card that you can’t afford with cash.
5). Take advantage of coupons, discounts, and sales
You should find out some the ways to save some money. Try to shop thrifty while getting the groceries, clothes, and school supplies soon. You can get deals, discounts, and coupons for your shopping. Use coupons, shop on a big sale to save lots of money while shopping.
Try to organize all the useful coupons and use them accordingly.
keep updated about sales, deals, and discounts on your favorite store so that you can get items at your favorable price.
6). Create an emergency fund to avoid surprising debts
Staying financially prepared is always a wise decision. Emergencies are unpredictable.
You should save some money on a regular basis to build up a cash cushion. This will help you self-fund your emergencies instead of leaning on debt to help you pay for it.
The best rule of thumb is to try to save at least 6-9 months of savings in an emergency fund. This will help you avoid taking out loans to cover your emergencies.
7). Try to save at least 20% of your income
According to all financial advisors, a person should save at least 20% of his/her monthly income. You should follow this suggestion to build up fat savings.
This cushion is another way to stay out of debt. Automating your savings to make savings will make it even easier. You should be able to automate a transfer from checking to savings through your online banking. This will help put it on autopilot and not spend the money because it will be transferred immediately.
8). Get educated about finance
Get educated about personal finance. You don’t know what you don’t know, right? Knowing basic personal finance principles will help you make informed decisions about your financial future.
How to get more educated about finance:
- Read good financial books
- Taking courses from financial gurus
- Follow personal finance experts on Instagram
- Listen to personal finance podcasts
9). Review your insurance coverage
Make sure you have enough insurance coverage on your house and vehicles. This will help you make sure you have enough and not paying for too much. Read the fine print. If you can spare a car while it’s down for repairs, you probably don’t need to carry rental coverage on your vehicles. If you have a fully-funded emergency fund, you might can increase your deductible to save on your monthly premiums.
You can also shop around for insurance and negotiate your premiums.
Remember, sometimes small things can add up to thousands of dollars each year.
About the Author
Patricia Sanders is a financial content writer. She has been praised for her effective financial tips that can be easily followed. Her passion for helping people who are stuck in financial problems has earned her recognition and honor in the industry. Besides writing, she loves to travel and read various books. To contact her visit http://www.yourcardinalpoint.com.