How to Engineer a Debt Free Life
Engineering a debt-free life flies in the face of the common practice of getting car loans and mortgages, holding onto credit card debt and paying off school debt. However, while many people may carry a credit card balance or owe a monthly payment for a car, that doesn't mean you have to. Living a debt-free life allows you to live freely and not worry about whether you can make your monthly payments.
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Instructions
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Pay off your current debts. You cannot live debt-free until you pay off your debts. Consolidate multiple credit card balances into one low-interest balance if possible, by transferring the balance from one card to a lower-interest card.
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Pay cash when you buy a car. Many new cars run upward of $20,000, but you don't have to buy a new car. Cars in general aren't good investments, because they depreciate, according to Cars.com. There are many used cars under $10,000 with low mileage that will get you where you need to go and leave you without a monthly payment if you pay cash for them.
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Use credit cards sparingly or not at all. Many people buy goods on impulse, and if you're a frequent credit card user, this practice quickly will lead to mountains of debt. All credit cards come with an interest rate, which means that unless you pay off the balance immediately, you'll pay more than the initial price of what you bought.
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Use your savings account. Put a certain amount of money into your savings each month, even if it's a small amount such as $100. The money in your savings serves as an emergency backup in case something goes wrong, such as losing your job or your car breaking down.
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Spend less by not paying for luxuries. Buy a more modest cable television package instead of the highest-priced one, for example, or rent an apartment that costs $500 instead of $750 a month. Each monthly outgo, such as rent or mortgage, that you can reduce saves you money and lessens your chances of falling into debt.
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Save for your next car by taking a portion of your money and depositing it monthly into a dedicated savings account. This way you have the money for your next car when the time comes, but if an emergency comes up, you have that money just in case.
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