Want to Live Debt Free? Try these 10 Things

[OMG Jim]

To many living debt free may seem like a dream but it actuality it is not as hard as you may think. With the exclusion of only your house or condo payment I can say from experience that the following list works.

How do I know? Well I'm debt free!

10 Things to Help You Live Debt Free

1. The Envelope System - Seems childish to many but it works and it used by more people than you think. Simply take a number of envelopes and label them with your fixed monthly bills and anything else that is part of your monthly budget. Each month allocate your funds accordingly and keep only one extra envelope. You should mark that "Entertainment". This has been one of the simplest and most effective budgeting systems used.

2. Live on Less - Simply learn to say "NO" to that snack you don't need, to that expensive dinner when a cheaper restaurant would do. This is something that every individual can do based on their particular circumstances.

3. Make more money - I know you work hard at your job but sometimes you have to consider the possibility of a second part-time job if you really want to get ahead and become debt free. If you are in a commissioned job then it is up to you to determine how much extra you need to work to attain your goals. All others must either change jobs or go the part-time job route.

4. Don't use credit - This is the number one cause of people not being able to be debt free. It's this simple, if you don't have the money to buy it the DON'T. I realize that emergencies will always arise but if you really need it then budget a portion of your monthly income as your own lay-away plan. In the end you will pay less and feel better because you will owe nothing on it. I realize that in the U.S. it is almost impossible to build your credit score without the use of credit cards but if you must choose one for gas purchases only and one for weekly grocery store visits. Then use the money from the corresponding envelope to pay that bill each month. Takes discipline but it can be done.

5. Pay cash for your car - A new car or a lease is a huge waste of money. We all know that the value of a new car drops dramatically as soon as you drive it off the car lot so this is your option. In this day and age it is very easy to shop for just about anything so get the Kelly Blue Book prices and start your search. I have always purchased cars that were about 5-7 years old for cash and from private owners whenever possible. Over the past 10 years my average monthly cost per vehicle is alway under $200 a month.

6. Establish a budget - Easier said than done for sure. But the point is you HAVE to do this in order to get out of debt. There is no one system that works for everyone but I can tell you this, keep track of your money yourself and do it on a daily basis. This is the only way you will be able to know first hand "Where the money went". Until you establish a budget then don't plan of getting out of debt any time soon.

7. Pay off your credit cards - ASAP! This is why the majority of you are in debt in the first place and this is the most likely the most EXPENSIVE debt you are carrying. First call any of your credit card companies and request a decrease in your interest rate and then always pay as much as possible each month until these debt are paid.

8. Set up an emergency fund - You've probably heard this a hundred times but it is now more true than ever in our current economic climate. You need 3-6 months of your basic living expenses in an emergency fund, mainly in case you lose your income or job, and it must be earmarked for this purpose only!! This will get you through the short term and also allow you the opportunity to concentrate full time on looking for a new full time gig without having to go out an get a part-time job.

9. Save for the future - If you have done everything listed above you will be well on your way to being debt free but you have to realize that Saving for the Future is also an integral part of this process. Part of your budget needs to be a percentage of your monthly income dedicated to saving. For me it was saving for three college funds starting over ten years ago and now my kids college is covered.

10. Manage your expectations - When all is said and done YOU are the only one that can manage yourself, your time, your money and your expectations. Don't rely on or blame anyone for your lack of discipline when it comes to your money. Set up a system that works for you and manage it with one thing in mind, failure is not an option. The more routine your system becomes you will then see what you can do to improve on it.

Note: There is no fool proof system for getting out of debt or staying out of debt but in the simplest of terms you've just got to "Make More than You Spend".

[baddog]

Originally Posted by AlmightyJim

Note: There is no fool proof system for getting out of debt or staying out of debt but in the simplest of terms you've just got to "Make More than You Spend".

Actually, that is the fool proof system.

[IllTestYourGirls]

Good list. I live debt free. If you are not worried about impressing others it is really easy to live debt free. You would be amazed how quickly you can save to buy a house cash never mind a car.

[Scott McD]

Originally Posted by AlmightyJim

7. Pay off your credit cards - ASAP! This is why the majority of you are in debt in the first place and this is the most likely the most EXPENSIVE debt you are carrying. First call any of your credit card companies and request a decrease in your interest rate and then always pay as much as possible each month until these debt are paid.

I just paid mine off last month !!!