How to Live a Debt-Free Lifestyle
Responsible use of credit is not only necessary when trying to keep a good FICO score, it is also important in ensuring your family and you are able to realize your dreams and goals. Nothing can put the kibosh on the risks necessary to realize a dream faster than credit card debt. Living a debt-free lifestyle opens the door to a lot of possibilities.
Other People Are Reading
Instructions
-
-
1
Rethink your priorities. If your priorities in life involve “keeping up with the Joneses’” and having the newest electronic items at all times, a debt-free lifestyle may not be for you. The debt-free lifestyle is most easily obtained and maintained by those who look for quality of life outside of material possessions.
-
2
Live within your means. You should never spend more than you make. Make a budget with all your income and expenses. Start by writing in your monthly income, and then subtract all expenses you can’t survive without such as rent/mortgage, food and electricity. Add any additional expenses you have (clothing, fun, cable). Add all your expenses to your budget until you have spent 80 percent of your incoming money. This is what you can reasonably afford to spend. The other 20 percent should be put toward savings.
-
-
3
Pretend your credit cards don’t exist. Do not think of them when trying to determine how you will afford car repairs and other surprise expenses. Living a debt-free lifestyle means not accruing any debt, so you may have to think of other ways to come up with money. Sell some books, have a yard sale, bring old clothes to a consignment shop. There are many ways you can create extra money without resorting to credit card use.
-
4
Pay with cash only. Each pay period, take out the money you’ve allotted to groceries, gas, entertainment and disposable income, and keep it in cash in your home. Do not use a credit card or debit card for any purchases--only cash. This will help you to keep yourself on budget.
-
5
Paper or plastic? Reuse, repair and recycle! When you stop viewing everything as disposable, you save money and increase your chance at success in living a debt-free lifestyle. Reuse bags at grocery stores that give you discounts for doing so. Don’t buy a new watch because the battery stopped working on your old one. Buy a new battery. Get torn clothing fixed, old shoes re-heeled and handbag handles repaired.
-
6
Furniture is a big expense that people tend to finance. If you are in the market for new furniture, try your local Salvation Army, thrift store and consignment shops. You can find great furniture at 50 to 90 percent off brand-new prices. With such low prices, you can also afford to refinish, refurbish and recover the furniture if it does not quite match your style.
-
1
Tips & Warnings
Try to make a game out of not spending money.
Keep a jar for change, and reward yourself weekly for your financial prowess!
