It’s fair to say that everyone has their own personal financial goals in life. Whether you wish to travel the world, live in luxury, own a home or retire by a certain age. However, for many people, these goals can come with the baggage of debt. This doesn’t have to be the case though. Living a debt free life is something we all strive for and it can be achievable with the correct amount of discipline, strategy and shift in mindset. Here is how you can start the journey to a debt free life.
The first step to your debt free life is to track all your expenses and income through a highly detailed budget. With everything laid out in front of you, it’s easy to see where all your money is going, and ways you can cut back on unnecessary expenditure. This money can then be added into your debt repayments, making sure to tick off the high-interest debts first.
Something to do in order to look out for your future self is to start building up an emergency fund. This is something you would have as a separate savings account to help you prepare if something was to happen one day. Try and aim for around 4-6 months’ worth of living expenses saved, putting aside a bit of money each month. This will leave you well prepared and will prevent you from having to take out a loan and go into unnecessary debt.
It might sound simple, but it is important to be realistic about your spending. Understanding that you might want something but can’t afford it, can be a hard pill to swallow, but you must learn to be strict with yourself and stick to your budget. If you make the decision to live within your means now, eventually you will be able to splurge on those things you’ve always wanted. But in the meantime, try your best not to give into the temptation by separating your ‘wants’ from your ‘needs’, as these will only result in unnecessary expenses.
While loans can be beneficial when making large purchases such as a home, it’s important to remember not to take on more than you can comfortably repay. When planning your budget, be realistic about the amount you can afford to repay each week. And always remember, the best way to reduce your debts is by not adding to them.
Generally speaking, credit cards have a high interest rate and therefore should only be used if necessary. If you are using a credit card, it’s important to avoid accumulating further debts by ensuring you pay off your balance monthly.
Mastering the art of debt free living is no easy task, but with a clear plan and self-discipline, it can be achievable. Though it will take time and effort, the freedom and peace of mind that comes with living a debt free life is well worth the wait.
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