Staying debt free is a very challenging task. With the way that the world is set up nowadays, it’s essentially impossible to stay 100% completely debt free. This is because consumerism and capitalism rule the world, and a lot of things can be bought using credit. This means that even if a thing is outside your budget, you could still own it by paying for it on a timely basis. Because of that, the pressure to buy new things and the latest trends is at an all-time high. Despite all of that, staying debt free is still a worthwhile goal since the financial security and freedom you get from it is such a relief that gives off peace of mind.
There are different strategies to employ, such as credit card bonus offers if you really have to use a credit card. Such a way gives you a chance to at least minimize expenses and maximize the use of a credit card. Let’s also explore some ways that could help you achieve a debt-free life.
- Understand your financial situation. Take a gander at your current financial situation. Are you in much debt? Are you paying for things that you’re not using, such as that gym subscription that you haven’t used for months? Do you pay for internet speeds that aren’t being utilized to their full use? Is your current income supporting the lifestyle that you’re living? Or is your lifestyle too much for your current income? All of these things should be taken a look at and considered before doing anything else. That way, you’d have a comprehensive understanding of your situation. After this, you’d be able to assess what are the specific steps that you have to take.
- Budget your expenses. Now that you’re aware of the situation that you’re in, it’s time to structuralize your situation. The next step to being debt free is to make a budget breakdown that outlines your expenses and income on a timely basis. Look at the things that you could take some funds off or reallocate money to things that matter more. Creating a budget lets you stay on track with things and have a sense of control. It’s usually the people that spend aimlessly that get into the most debt, so creating and sticking to a budget would be the most beneficial for you.
- Prioritize high-interest debt. If you’re already in debt, then it’s better to prioritize the ones that have big interest rates. This is because such debts will cost you more money, in the long run, the longer they stay on you. Getting rid of them as quickly as possible would let you focus on other things, and you’d also save more money in the long run. For example, you could transfer high-interest credit card balances to a different card with lower interest rates. This way, you’d still be paying your debt but at a lesser interest rate.
- Prepare for emergency situations. It’s never a bad idea to save some of your funds for emergencies. Such emergencies can come in different faces, such as accidents, illnesses, calamities, and even a death of a family. All of these cost a lot of money, so it’s better for you to have some buffer before you allocate all of your income to the tragedy. Worse yet, you’re digging yourself deeper into debt when borrowing money to pay off such emergency situations if you don’t have savings. The rule of thumb for such a cushion is that you should save at least three to six months’ worth of expenses for an emergency fund. Of course, you could adjust this in accordance with your financial situation and capabilities.
- Consult professionals. Every financial situation is unique, and that includes your current situation. If ever you’re struggling with debt and finding yourself unable to easily get out of it, seek help. Such help may come in the form of a financial professional or other professionals that are capable of understanding and assessing your situation. Financial advisors and credit counselors are examples of these people, and they may just be the tool for you to be debt free. Better yet, they may even be able to help you stay debt free.