Many people do not know what it is to be debt free. Many young adults begin their independence by attending college and taking out student loans to finance their education. They can additionally take advantage of the many credit cards offered to students and can graduate with thousands of dollars in credit card debts. Once they graduate, they move to car loans and mortgages, never stopping to think about how debt free. Payments are just a way of life.
Think about what you could do without debt payments
Consider the amount you pay each month in consumer debt and what you could do if you did not apply it to pay the debt every month. If you have $ 5,000.00 in credit card debt, a student loan payment and a car payment you can pay between $ 300.00 to $ 700.00 in debt payments per month. If you already don’t put that much extra money in the direction of savings or invest your assets can begin to grow. Paying interest on your debt every month is just one of the habits of broke people.
Think of your Freedom from Debt
It also means freedom. You can quit your job if you are not satisfied without worrying about whether you will be able to keep your house or will be able to make your payments. It means freedom of weight that is to blame. Guilt is a major concern that is always in the back of your mind, even if you are pretty good at ignoring it. It means that you can make your money work for you and you can start to build wealth.
Change the way you think about the debt
People often mistakenly look at credit as an easy way to get the things they want now. They fail to look at the long-term consequences and the costs that debt brings. Living debt free allows you to live the kind of life you want to live. It means you don’t have to worry about payments or what would happen if you suddenly lost your job.
It can be revolutionary to think about life free from debt. A life without payments is very different from one with payments. Debt free life means saving for things. It means making sacrifices and resisting impulse purchases. It means limiting the amount of money you waste every month. It means planning for larger purchases and making sure you spend your money on the things that are most relevant to you.
Put a plan in place
To be debt free you need to make a debt payment plan. First you must list your debts for interest. Then you have to apply extra money, to find your debt every month. It can mean cutting back on your expenses or taking a second job. Then all of the extra money you apply to the first debt on your list. Once you have paid off you proceed to the next claim, taking the extra money as the amount to be paid from the first debt. You continue this until you have paid all debts.
This system is also called a snowball, because the payments get bigger when each debt is paid off, you can pay off the remaining debts much quicker. Depending on the amount of debt you have you need to focus for a year or two to pay off your debts. If you have a large amount of debt, it helps to break off the plan so that you have milestones that you meet along the way.
Compliance with Staying debt free
Once you have become debt free, you must commit not to go back in debt. It means planning and saving money for larger purchases. It means sticking to a budget, but all these things are worth the debt free. It is important to remember that the freedom that comes with living guilt-free. Don’t let all the work needed to get there get lost by taking on additional debts. An emergency fund can help you stay out of debt, but your budget is your best tool to stay out of debt.