3 Awesome Ways to Get and Stay Debt Free
I don’t know a living soul who likes the feeling of being in debt.
About 5 years ago, I guess I “had it all”; a big house, nice car, a good job, etc.
But with the big house came a big mortgage, with the nice car came a ‘nice’ monthly car payment, and the job was good, but wasn’t something that I could see myself doing long term.
With the house, car and the job, also came a number of credit cards; you name it, I had it; Amex, Mastercard AND Visa (as well as a few store cards). At a certain point, it all started to give me a particular kind of anxiety, and one day I just decided that I didn’t want it anymore.
The endless monthly payments, credit card companies ‘willy nilly’ raising my credit limits (and you know what happens when they raise your limits), it was all more than I could handle.
I decided that keeping up with all of the payments just wasn’t worth what it was doing to my health. Accumulating more and more “stuff” was taking its toll on me health-wise, and financially I wasn’t saving money for any kind of rainy day. So I started cutting back.
I also made a major move from one city to another, the second city being much more expensive to live in than the one I was leaving. So I had some decisions to make.
I had to pare back on all of that ‘stuff’ that I mentioned before. I was moving from the suburbs to a location downtown, which meant turfing the big house, and moving into something much smaller…a condo. Living downtown also meant that I’d likely not need to have a car, as everything that I’d need would be within walking distance.
In addition, I wound up switching jobs, which took care of any kind of commuting expenses that I might have for work, as work was now also within walking distance.
In preparation for this move, I took a few months and paid off all of those credit cards, switching instead to one secured card.
I sold the big house, replacing it with a condo, and I sold the car (because I don’t need one where I live), but the condo came with a parking space that I rent out, so I’m actually making money there ?
There are no more huge mortgage payments, no car payments, payments for car insurance or gas. Costs associated with the car alone total approximately $1200 a month in savings!
I sold or gave away just about everything in order to move to a smaller space, and I don’t regret it for one second. I’m happier now than I’ve ever been. I have everything that I need, and I have no debt, or the stress that used to come with it.
In addition, I made a budget, and I stuck to it.
If you dream of living without excessive debt hanging over your head, it’s totally doable, and it’s easier than you think!
Here are 3 Awesome Ways to Get and Stay Debt Free:
1. Get rid of any existing debt.
This is obviously the first step to to Getting and Staying Debt Free.
Cut up any credit cards that you have right now in your wallet, purse, or desk drawer and DO NOT apply for, or accept any other cards.
Pay your bills on time, sending as much as possible to one account while paying the minimum due on all of your other accounts until the account is paid off. Do this until it’s all been paid off.
2. Create a budget.
The second of 3 Awesome Ways to Get and Stay Debt Free is to create a budget.
Everyone who lives without debt has a financial budget and follows it.
If you don’t budget for expenses, you’ll overspend on all kinds of random crap that you don’t need. Then when the unexpected arises, you’ll find yourself turning to credit cards to make up for the shortfall.
That’s not an option.
Make a list of every single monthly expense that you can think of. Then make another list of all your incidentals, things that you pay for on a regular basis, but aren’t necessarily monthly payments. So if you get your teeth cleaned at the dentist twice a year at $100 a pop, budget $200 a year for teeth cleaning, which is about the equivalent of $16.66 a month.
Once you have a list that includes every little thing you spend on, subtract your total monthly expenses from your total monthly income and see what’s left over. Make sure you include savings accounts in your expenses.
“Pay yourself first” is a good rule to abide by. If there’s still money left over, congratulations! Use it to pay more on each individual account until everything is fully paid off.
3. Avoid credit like the plague.
One of the best ways of the 3 Awesome Ways to Get and Stay Debt Free, is to avoid credit once you’ve got rid of the old credit cards.
Make all of your purchases with cash and you’ll never fall into the credit/debt trap again. If you need a credit card for things like hotel or flight reservations, simply get a secured card from any reputable bank (your bank might offer them). They’re a great way to pay for things that you can’t necessarily pay cash for.
When you’re starting your journey to a life without debt, you have to watch exactly where your money is going. Make sure you keep track of your spending for a certain amount of time, to see where you might be wasting money, and where you can painlessly cut some of your costs.
Physically write down where you spend your money and what you spend it on, including how much you pay for every item, where you bought it, and what for. Don’t rely on your memory for this, because you’ll definitely leave something out.
Include all bills that you paid, how much you paid, and how much you still owe. After a few months of tracking your spending habits, you’ll be able to see exactly where all of your money is going, and you’ll be surprised at how much your little purchases were adding up and “nickel and dime-ing” you into the poor house!
That cup of coffee you grab every morning on the way to work could be costing you $10 or more each week; about $40 a month, when making your own coffee at home would definitely save you a ton of cash!
How to Stay Debt Free
One of the biggest mistakes that a lot of people make after getting out of debt, is to allow themselves to fall back into old spending habits. They feel financially “lighter”, and before they know it, they’ve racked up another few thousand in credit card bills, and they’re heading down the same path to the place they were before they’d paid off all the debt.
You don’t have to carry credit cards in your purse or wallet. Believe me, I know the feeling of going from having 3 or more credit cards at your disposal, to having none, but not having them will keep you from spending needlessly.
I think the best of the 3 Awesome Ways to Get and Stay Debt Free, is to have only one credit card, and keep it in a block of ice in the freezer for ’emergencies’.
Put the credit card in a freezer bag and zip it shut. Then fill another freezer bag with water. Drop the bag with the credit card in it, into the bag with the water in it. Zip up the bag of water, and toss both into the freezer.
Why should you do this?
Well…at the very least, freezing your credit card gives you time to think about any purchase that you want to use it for, because in order to access it, you’ll need to wait for it to thaw out. By the time that happens, whatever purchase you wanted to use it for, likely won’t seem that important. Odds are that you’ll change your mind in the time it takes the card to thaw out!
I hope that any of the 3 Awesome Ways to Get and Stay Debt Free helps you to get and STAY out of debt!