It is important to have a good financial health and live a debt free life. Debt is one thing we try to avoid but encounter them a couple of times in our lives. It’s easy to say “Just pay all your debts how hard could it be” but the reality is, some debts are not easy to pay back.
That’s why you need to learn how to live your life debt-free so that you can acquire financial independence.
Are you tired of owing so much money? Or making payments every now and then, you do not have enough to save? Do you want to start living a debt-free life? Then this article is for you!
Here are 6 easy steps to start living a debt free life;
1. Stop borrowing
To stop a leaky tap, you have to cut the water supply. The same thing applies to being in debt, to stop being in debt, the first step is to stop borrowing money. As attractive as the things you want may be, you should know what you can afford and what you cannot. Start training yourself to not borrow from other people to fund the lifestyle you cannot afford. Start living according to how much you earn.
Once you stop this habit, you will start to realize that the things you craved for were not necessary and your financial pocket can have a rest.
2. Start making a budget
Money not budgeted for is as good as gone. No matter how much you earn it is important to have a budget., this is the next step. A budget helps you know how much you can spend and how much you have to save at the end of the month.
Create a budget that is realistic with your goals and stick to it. There are also and so much more. These budgeting apps help you limit your spending and save more, let you know your credit score and even provide options of investment depending on the app you use.
You can start planning your budget from one day, then plan towards the next week, then finally the whole month. You may have some extra money after the whole month which you can add to your savings.
[Also read: The 50-20-30 Budgeting Rule and how it works]
3. Start saving for emergencies
Setting up a separate savings account just for emergencies is one of the smartest ways to start a debt-free life. This is because, unforeseen circumstances may occur and it could mess up your budget, instead of running to a friend to loan money and be in debt, you could turn to your emergency funds and rescue yourself out of any sticky situation.
Start by saving 10% of your income every month and gradually increase it whenever you feel you’re comfortable enough to do that. Life is filled with sudden events, having a backup plan to deal with it, is the only way to not get drowned by its surprises.
4. Live the lifestyle you can afford
The world keeps changing and it’s getting harder to keep up with the new trends even if they may be above your paygrade, so it can be tempting to want to be part of every trend, however, leading you to so many debts you may not recover from, which can be gruesome to your financial health.
To keep living the lifestyle you can afford, start by saying “NO” to the things you cannot afford. As tempting as it can be, training your mind to say “NO” every time you see something that is a possible threat to your financial status, prevents you from debt.
Also, cut down on unnecessary fees. Identify them and cut them down. If you’re used to eating at your favourite expensive restaurant every Friday, you need to reconsider and start cooking at home on Fridays. It’s only okay to revisit these expenses when it would not harm your financial health.
[Also read: How to Retire at 40 and enjoy life]
5. Start another stream of income
The next step is to create another means of making extra money. There are one million and one ways to make extra cash and still focus on your main source of income. A wide variety of options such as paid surveys, playing games, using a skill you have to earn money, buying and selling products, monetizing your hobbies and so on. This is another way to stay debt-free.
If you have debts, making extra cash from a side hustle will help you pay your debts faster. Once they are all paid, you can save some of the money or buy yourself something nice to celebrate your progress.
Also read:7 Streams of Income Most Millionaires Use]
6. Commitment
The final step is to commit to becoming debt-free. It can be tough making this commitment to yourself alone, make it to your friends, family or colleagues.
The purpose for the committing to your friends, family or colleagues is because an effective way to stick to a commitment is to share them with others and letting them your reasons for wanting to attain this goal. Just like an accountability partner, someone who can help you track your progress, redirect your focus in case you falter and always keep you on the right track.
The above steps cannot be possible if there is no commitment or dedication to want a debt-free life. it all starts with the mind then the body will follow in accordance.
Pro tip: If it gets too difficult to continue, just call your accountability partner to motivate you. We all need the motivation to achieve our goals.
Conclusion
Whatever debt you’re in whether its car loans, mortgage, student loans etc. know that there is always an escape plan to get out of it. it may be easy to live your life based on bad debts and credits but at a point it becomes uncomfortable because you have become a slave to your finances, paying one debt to another from one month to the next.
The debt-free life might seem difficult but it is certainly rewarding.
What other ways do you know about living a debt-free life? Share with us in the comments.
